A bill to amend title 10, United States Code, to establish certain requirements with respect to contracts with defense firms in which certain foreign governments own or control a significant interest, and to prohibit the award of engineer equipment acquisition contracts to firms in which the Libyan Government owns or controls an interest.

Amends Federal defense procurement provisions to prohibit the head of a defense agency from contracting with a firm in which a foreign government (or an agent or instrumentality of such foreign government) owns or controls a significant interest, if such foreign government: (1) is an enemy of the United States; or (2) has repeatedly provided support for acts of international terrorism.

Authorizes the head of a defense agency to enter into a contract with such a firm: (1) at the end of the 30-day period after such agency head submits a report to the Congress describing such contract; and (2) if the Secretary of Defense has determined that entering into such a contract would not be inconsistent with the foreign policy or national security objectives of the United States.

Directs the head of an agency to require any firm submitting a bid or proposal to disclose any significant interest owned or controlled by a foreign government. Makes this Act inapplicable to: (1) contracts for less than $100,000; or (2) the Coast Guard or the National Aeronautics and Space Administration. Directs the Secretary, within 180 days after the enactment of this Act, to prescribe regulations to carry out this Act.

Prohibits the Secretary from obligating or expending any amount appropriated to the Department of Defense for FY 1986 or 1987 for certain engineering equipment acquisition contracts to any firm in which the Libyan Government owns or controls a significant interest.