A foreign company can enter the U.S. defense market, and many do, but success depends far more on sequence than on any single approval. The firms that stall almost always take the right steps in the wrong order. This roadmap lays out the sequence in plain English, from the first feasibility question to the point where you can realistically compete for work. It is written for foreign manufacturers, allied suppliers, technology firms, and any company new to selling to the U.S. Department of Defense.

This is a general guide, not legal advice. Export control and foreign ownership questions are specific to your facts, and several of the steps below have points where qualified counsel should confirm the details for your situation.

First, the honest answer: yes, but the market has layers

Foreign ownership does not shut you out of U.S. defense work. It changes the structure around you, and the market is best understood as three layers. The commercial and unclassified layer is broadly open, and many foreign firms sell goods and services to the Department of Defense without ever touching classified information. The controlled-information layer adds cybersecurity and safeguarding obligations, because you will handle sensitive but unclassified information under specific contract clauses. The classified layer is where facility clearances and foreign ownership mitigation come in, and it is the most involved to reach. Knowing which layer your offering belongs in is the single most useful thing to establish at the start, because it determines almost everything that follows.

Step 1: Run a feasibility check before you spend money

Before any registration or setup, map your capability against real demand. Identify which agencies and prime contractors actually buy what you offer, whether your path is commercial, controlled, or classified, and where the credible near-term openings sit. The output you want from this stage is a clear go or no-go and a realistic timeline. Firms that skip this step often spend months on setup for a market position that was never viable, or pursue classified opportunities that their structure cannot support yet.

Step 2: Decide on a U.S. entity, then get registered

Two questions sit together here. First, do you need a U.S. subsidiary? Some commercial and unclassified paths can be pursued without one, while classified work and certain registrations make a U.S. entity necessary or strongly advisable. Second, get your registrations right, because small errors here cause some of the longest delays in the whole process. The core registrations are a Unique Entity ID, a commercial and government entity code (a CAGE code for U.S. entities, or an NCAGE code for foreign entities), and an active registration in the System for Award Management at SAM.gov. These records are the foundation that later steps depend on, so accuracy matters more than speed.

Step 3: Understand your export control obligations early

This is where foreign entrants most often underestimate the work, and starting late here is a frequent cause of failure. Two regimes matter most. The International Traffic in Arms Regulations, administered by the Directorate of Defense Trade Controls at the Department of State, govern defense articles and services on the U.S. Munitions List. If you manufacture, export, or broker items on that list, registration with the Directorate generally applies. The Export Administration Regulations, administered by the Bureau of Industry and Security at the Department of Commerce, govern dual-use items and many commercial goods with defense applications.

Two points catch entrants off guard. The first is simply determining whether your product is controlled at all, which is a specific determination worth getting right early. The second is the deemed export rule: releasing controlled technical data to a foreign national, even one of your own employees inside your own company, can count as an export that requires authorization. For a foreign-owned firm with international staff, this is a real and common trap. Plan your technology control approach before you handle any controlled data. Our export compliance stance explains the regimes we work within.

Step 4: Be aware of CFIUS if investment is involved

If a foreign investment or acquisition is part of your entry, the Committee on Foreign Investment in the United States may review the transaction, particularly where it touches critical technology, critical infrastructure, or sensitive data. CFIUS operates separately from the contracting and clearance processes, and it is administered through the Department of the Treasury. Not every entrant triggers a CFIUS question, but if your entry involves acquiring or investing in a U.S. business, factor it in early rather than discovering it mid-transaction.

Step 5: If you need classified access, plan for FOCI now

To perform on a classified contract, a company generally needs a facility security clearance. A foreign-owned company cannot simply hold one; it must first address Foreign Ownership, Control, or Influence, known as FOCI. This is the framework that determines whether, and how, a foreign-owned firm can access classified information, and it is administered by the Defense Counterintelligence and Security Agency. Mitigation is handled through one of several instruments, and which one applies depends on the degree of foreign ownership and control. In broad terms, lighter arrangements such as a board resolution address limited foreign influence, while more involved instruments such as a security control agreement, a special security agreement, a proxy agreement, or a voting trust address progressively greater foreign ownership and control. The right instrument for your structure is a determination made with the government, and the process takes real time. If classified work is your goal, start thinking about FOCI early, because bolting it on at the end is where timelines collapse.

For a full breakdown of the five instruments and when each applies, see our guide to FOCI mitigation, comparing the SSA, SCA, proxy agreement, and voting trust.

Step 6: Prepare for cybersecurity and safeguarding obligations

Most defense contracts that involve controlled unclassified information carry cybersecurity obligations. The safeguarding requirements under Defense Federal Acquisition Regulation Supplement clause 252.204-7012 and the associated security standards are the baseline, and the Cybersecurity Maturity Model Certification program builds on them. For an entrant, the practical point is that these obligations are contract-driven. When you pursue work that involves controlled information, expect to demonstrate that your systems meet the required standard. Planning your information security posture alongside your market entry, rather than scrambling after an award, keeps you eligible for the widest set of opportunities. Our compliance and documentation advisory helps you map these obligations to your situation.

Step 7: Convert eligibility into pipeline

Being eligible is not the same as winning work. With registrations and compliance in motion, the final stage is positioning. Federal opportunities are posted publicly, and mapping the ones that fit your capability is an ongoing discipline, not a one-time search. For a firm with no U.S. past performance, teaming with an established prime is often the fastest credible route to a first award, because you contribute your capability while borrowing the prime’s proven track record, and you build your own record in the process. Subcontracting works similarly, and our guide to teaming versus subcontracting breaks down which route fits a new entrant. Going direct as a prime is possible but usually harder for a newcomer without a track record. Finally, a clear, specific capability statement that tells a buyer exactly what you bring, and why it matters to their mission, does more work than any amount of general marketing.

The sequence, in one view

Put together, the compliance-to-first-award journey runs roughly like this: establish feasibility, decide on a U.S. entity, complete your registrations, resolve your export control posture, address CFIUS if investment is involved, begin FOCI mitigation if you need classified access, prepare for cybersecurity obligations, and then position to team, subcontract, or bid. The exact timeline depends heavily on whether classified work is involved, but the order is what protects you from wasted effort.

The five mistakes that cost entrants the most time

Registering before understanding export posture, and then discovering a control issue that reshapes the plan. Pursuing classified opportunities before addressing foreign ownership. Treating cybersecurity as an afterthought and losing eligibility for controlled-information work. Overlooking the deemed export rule with foreign national staff. And chasing prime relationships before the capability is clear enough for a prime to say yes.

Frequently asked questions

Can a foreign-owned company win a U.S. defense contract

Yes. Commercial and unclassified work is broadly open. Classified work requires a facility clearance and foreign ownership mitigation, which is a longer path but a well-established one.

Do I need a U.S. subsidiary

Not always. It depends on what you sell and whether classified work is involved. The feasibility stage settles this before you spend on setup.

What is the difference between ITAR and EAR

The International Traffic in Arms Regulations cover defense articles and services on the U.S. Munitions List and are administered by the State Department. The Export Administration Regulations cover dual-use items and are administered by the Commerce Department. Which applies depends on what your product is.

How long does entry take

It varies widely. Unclassified registration and positioning can move relatively quickly. Facility clearance and FOCI mitigation add substantial time. A realistic estimate requires knowing your specific offering and target work.

What is the fastest route to a first contract for a new entrant

For most firms with no U.S. past performance, teaming with an established prime is the fastest credible route, because it lets you compete on the prime’s track record while you build your own.

Where Nortrane fits

Nortrane guides foreign and new entrants through this exact sequence, vendor-neutral and in plain English, from the first feasibility question to a first award. Our defense market entry consulting is built around it. If you are weighing entry into the U.S. defense market, an initial consultation is the most useful place to start. Request a consultation.