WASHINGTON Ñ Israeli nationals could be banned from participating in U.S. defense contracts under new regulations that seek to keep foreigners out of sensitive projects.

U.S. officials said the Defense Department plans to reduce access by foreign nationals to military programs. They said this would include the use of foreign nationals in contracts relating to unclassified information used by the Pentagon.

Israeli nationals are said to be included in information technology-related contracts with the Pentagon, according to Middle East Newsline. This includes the sale of encryption technology and software required to protect the department's huge data base.

Pete Nelson, the Pentagon's deputy director for personnel security, did not refer to Israelis in an announcement of plans to limit foreign nationals from computer-related contracts. But he said the department is studying proposals to reduce participation of foreign nationals in contracts that deal with what he termed sensitive, albeit unclassfied, material.

"Some foreign nationals Ñ those in the most sensitive positions Ñ may not be permitted to remain in those positions," Nelson said. "As we review our security requirements as a nation, we need to ensure all people with access to sensitive IT [information technology] systems are cleared and properly vetted for the material to which they have access."

The plan focuses on projects for the U.S. Navy, Nelson said. In a statement, the official said everybody dealing in information technology projects for the navy would be vetted even when dealing with unclassified material.

Foreign nationals are already restricted from dealing with classified defense projects. The new regulations would be implemented between 60 and 90 days.

The Pentagon has expanded the outsourcing of computer contracts as a means to reduce costs and streamline personnel. Israeli companies and their affiliates in the United States Ñ which have developed security data systems Ñ are involved in a range of contracts for the Pentagon and the U.S. government.

"The IT business has become largely contractual, with programming and data work being farmed out to areas where there is cheap labor," Nelson said. "If this trend does not simultaneously take into consideration security requirements, there would be reason for concern."

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