When necessary, Treasury is responsible for delivering  the committee’s recommendation that the President should suspend or  prohibit a transaction. Member agency officials stated that CFIUS is able  to review all transactions that have been voluntarily notified to the  committee. National security concerns include traditional ones, such as threats to  U.S. critical infrastructure. Standards for Internal  Control in the Federal Government states that management should  establish the organizational structure necessary to achieve its objectives  and periodically evaluate this structure. However, Treasury, as  CFIUS lead, has not coordinated member agencies’ efforts to better  understand the staffing levels needed to address the current and future  CFIUS workload associated with core committee functions, such as  identifying and reviewing non-notified transactions. CFIUS Member Agencies and External Experts Provided Views on Benefits and Drawbacks of Possible Changes to CFIUS

Officials from CFIUS member agencies (voting and nonvoting) and  selected nonmember participant agencies, as well as external experts,  expressed a range of views on the potential benefits and drawbacks to  possible changes to CFIUS. In our interviews with them, these  stakeholders discussed a variety of possible changes to CFIUS that we  organized into three categories: (1) altering the structure of CFIUS, (2)  redefining which merger and acquisition transactions should be  considered for CFIUS review, and (3) expanding the list of factors CFIUS  considers as it evaluates the impacts of a foreign transaction on national  security. Perspectives among agency  officials and external experts varied on the potential effects of redefining  which transactions should be considered for review, such as requiring  CFIUS to review all covered transactions. They generally stated that including a net  economic benefit test in the review, for example, would not be beneficial. Many officials and external experts agreed that one potential drawback of  many of the possible changes is a likely increase to the CFIUS workload,  generating concerns about the committee’s capacity to complete its core  functions. Conclusions

The United States maintains an open investment climate that recognizes  the benefits of foreign investment to its economy. CFIUS reviews certain  foreign acquisitions, mergers, or takeovers of U.S. businesses to  determine the effect of the transaction on the national security of the  United States. Without attaining an understanding of the staffing levels needed to  address the current and future CFIUS workload, particularly if legislative  changes to CFIUS’s authorities further expand its workload, CFIUS may  be limited in its ability to fulfill its objectives and address threats to the  national security of the United States. Recommendation for Executive Action

The Secretary of the Treasury, as the chair of CFIUS, and working with  member agencies, should coordinate member agencies’ efforts to better  understand the staffing levels needed to address the current and  projected CFIUS workload associated with core committee functions. Appendix I: Objectives, Scope, and Methodology

This report (1) examines changes in the Committee on Foreign  Investment in the United States’ (CFIUS) workload and staffing from 2011  through 2016, and (2) provides information on stakeholder views on  potential changes to CFIUS. The potential national security-related effects on U.S. critical technologies.
Why GAO Did This Study

The United States economy has historically been the largest recipient of foreign direct investment in the world—receiving $373 billion in 2016, according to U.S. government statistics. Ensuring that these foreign investments do not harm national security can be a challenge. CFIUS is an interagency group that reviews transactions under its authority—certain foreign acquisitions or mergers of U.S. businesses—to determine their effects on U.S. national security, while maintaining an open investment climate. If CFIUS identifies concerns, it may work with parties to the transaction to mitigate them. In rare cases, CFIUS may recommend that the President block or suspend a transaction.
GAO was asked to review the CFIUS process and possible changes to that process. This report (1) examines changes in CFIUS's workload and staffing from 2011 through 2016, and (2) provides information on stakeholder views on potential changes to CFIUS. GAO analyzed CFIUS information on staffing levels and transactions reviewed, and interviewed officials from member agencies, selected nonmember agencies that have CFIUS-related expertise, and knowledgeable external experts, such as think tanks.

What GAO Found

states that management should establish the organizational structure necessary to achieve its objectives and periodically evaluate this structure. Treasury—the agency that leads CFIUS— has not coordinated member agencies' efforts to better understand the staffing levels needed to address the current and future workload associated with core functions of the committee. Without this information, CFIUS may be limited in its ability to fulfill its objectives and address national security concerns.
Officials from CFIUS member agencies and selected nonmember agencies, as well as external experts, expressed a range of views on the potential benefits and drawbacks to possible changes to CFIUS. GAO organized the possible changes into three categories: (1) altering the structure of CFIUS, (2) redefining which transactions should be considered for CFIUS review, and (3) expanding the factors CFIUS considers when evaluating the impacts of a foreign transaction on national security. Agency officials were generally satisfied with CFIUS' structure, such as the committee's chair and membership. Views among officials and experts varied on redefining which transactions should be considered for review, such as requiring CFIUS to review all transactions covered by its authority regardless of notification. Officials and experts generally did not support expanding the list of national security factors CFIUS considers, such as by adding a net economic benefit test. Agency officials and experts agreed that one trade-off related to some possible changes is a likely increase to the CFIUS workload, which they noted is already straining agencies' staff resources.

What GAO Recommends

Treasury, as CFIUS lead, should coordinate member agencies' efforts to better understand the staffing levels needed to address the current and projected CFIUS workload associated with core committee functions. Treasury concurred.