Leading U.S. technology firms are urging Congress to narrow legislation that would put new restrictions on foreign transactions in the name of national security.

The bill (S. 2098) as currently written would require government scrutiny of virtually any kind of technology transfer that a company undertakes, according to the Washington-based Information Technology Industry Council, which represents Apple Inc., Google Inc., IBM Corp., and other tech giants.

Christopher Padilla, vice president for government and regulatory affairs at IBM, testified before the Senate Banking Committee Jan. 18 about the legislation. He said IBM supports the underlying goal of the bill, but his...