The U.S. government faces a stark paradox: it is desperately hungry for innovation yet constrained by a regulatory framework designed for a Cold War industrial base. This tension defines the current reality for startups and foreign technology firms attempting to enter the U.S. defense market. According to Louverture Jones, Senior Director at Alvarez & Marsal Trade and Technology, speaking at AIAA SciTech Forum 2026 in Orlando, the era of entering the defense industrial base with a promising prototype and sorting out compliance later is over.
Jones shared key insights during his session:
- The compliance window has closed: acquisition professionals now require suppliers to arrive “compliance-ready,” and non-compliance means award delays of 12 to 24 months.
- Foreign Ownership, Control, or Influence (FOCI) is the top threshold for foreign-invested entities: companies must map their capitalization tables early and may need separate subsidiaries, proxy agreements, or restructured investor rights.
- Export controls (ITAR and EAR) require early product portfolio mapping: modifying a commercial technology for military use can trigger ITAR restrictions, and misaligned staffing authorizations can derail awarded contracts.
- CMMC 2.0 is non-negotiable for handling Controlled Unclassified Information (CUI): retrofitting later is costly, so “compliance by design” from the start is the only viable path.
- Regulatory navigation is a competitive advantage: organizations that treat compliance as a strategic asset – not a barrier – will win in the modern defense market.
“Compliance readiness is not just about winning awards,” Jones said. “It is about speed.”
