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EXPORT COMPLIANCE FOR ACQUISITION PERSONNEL & DFARS SUBPART 204.73

EXPORT COMPLIANCE FOR ACQUISITION PERSONNEL & DFARS SUBPART 204.73. Breakout Session # 607 Name: Wayne Ferguson, Export Compliance Officer/Manager, Contracts CAE USA Inc., Tampa, FL, Tel. 813-887-1423 e-mail wayne.ferguson@caemilusa.com Date: 20 July 2010 Time: 1600. 1.

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EXPORT COMPLIANCE FOR ACQUISITION PERSONNEL & DFARS SUBPART 204.73

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  1. EXPORT COMPLIANCE FOR ACQUISITION PERSONNEL & DFARS SUBPART 204.73 Breakout Session # 607 Name: Wayne Ferguson, Export Compliance Officer/Manager, Contracts CAE USA Inc., Tampa, FL, Tel. 813-887-1423 e-mail wayne.ferguson@caemilusa.com Date: 20 July 2010 Time: 1600 1

  2. Goals of This Session Know that, per DFARS Subpart 204.73, DFARS 252.204-7008 is required in all DoD solicitations and contracts Understand that we, as acquisition professionals, need to have a general knowledge of the export control laws and regulations even when contract deliverables are not to be exported.

  3. Exporting - A Heavily Regulated Area KEEP IN MIND - The aims of all the export laws and regulations are The stated aim - The protection of critical U.S. technology from falling into the wrong hands and The unstated aim – The protection of financial, IP, and other interests of U.S. companies in critical U.S. technology.

  4. Exporting - A Heavily Regulated Area – Three Main Regulatory Agencies U.S. DEPARTMENT OF COMMERCE - Under the Export Administration Regulations (EAR), the Commerce Department Bureau of Industry and Security (BIS) regulates the export of dual-use items listed on the Commerce Control List (CCL). The EAR's authorizing statute is the Export Administration Act JURISDICTION OVER - Commercial and Dual Use items enumerated in the CCL in the EAR

  5. Exporting - A Heavily Regulated Area – Three Main Regulatory Agencies, cont’d. U.S. DEPARTMENT OF STATE - Under the Arms Export Control Act of 1976, 22 USC § 2778, implemented via the International Traffic in Arms Regulations (ITAR) and the U.S. Munitions List (USML). JURISDICTION OVER - U.S. Munitions Listarticles in the ITAR: Weapons and equipment/data designed specifically for use as/on military equipment and parts thereof.

  6. Exporting - A Heavily Regulated Area – Three Main Regulatory Agencies, cont’d. U.S. DEPARTMENT OF TREASURY – Via the Office of Foreign Assets Control (OFAC), administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals. JURISDICTION OVER - All U.S. products’ shipments to certain prohibited countries

  7. Now Comes the DoD with DFARSExport Requirements SUBPART 204.73--EXPORT-CONTROLLED ITEMS (Revised April 8, 2010) 204.7300 Scope of subpart This subpart implements Section 890(a) of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181). 204.7301 Definitions “Export-controlled items,” as used in this subpart, is defined in the clause at 252.204-7008.

  8. DFARS Export Requirements, cont’d. SUBPART 204.73--EXPORT-CONTROLLED ITEMS (Revised April 8, 2010), cont’d. 204.7302 General Certain types of items are subject to export controls in accordance with the Arms Export Control Act (22 U.S.C. 2751, et seq.), the International Traffic in Arms Regulations (22 CFR Parts 120-130), the Export Administration Act of 1979, as amended (50 U.S.C. App. 2401 et seq.), and the Export Administration Regulations (15 CFR Parts 730-774). See PGI 204.7302 for additional information.

  9. DFARS Export Requirements, cont’d. SUBPART 204.73--EXPORT-CONTROLLED ITEMS (Revised April 8, 2010), cont’d. 204.7303 Policy (a) It is in the interest of both the Government and the contractor to be aware of export controls as they apply to the performance of DoD contracts. (b) It is the contractor’s responsibility to comply with all applicable laws and regulations regarding export-controlled items. This responsibility exists independent of, and is not established or limited by, this subpart. 204.7304 Contract clause Use the clause at 252.204-7008, Export-Controlled Items, in all solicitations and contracts.

  10. DFARS Required Solicitation/Contract Clause 252.204-7008 Export-Controlled Items As prescribed in 204.7304, use the following clause: EXPORT-CONTROLLED ITEMS (APR 2010) (a) Definition. “Export-controlled items,” as used in this clause, means items subject to the Export Administration Regulations (EAR) (15 CFR Parts 730-774) or the International Traffic in Arms Regulations (ITAR) (22 CFR Parts 120-130). The term includes: (1) “Defense items,” defined in the Arms Export Control Act, 22 U.S.C. 2778(j)(4)(A), as defense articles, defense services, and related technical data, and further defined in the ITAR, 22 CFR Part 120. (2) “Items,” defined in the EAR as “commodities”, “software”, and “technology,” terms that are also defined in the EAR, 15 CFR 772.1.

  11. DFARS Required Clause, cont’d. (b) The Contractor shall comply with all applicable laws and regulations regarding export-controlled items, including, but not limited to, the requirement for contractors to register with the Department of State in accordance with the ITAR*. The Contractor shall consult with the Department of State regarding any questions relating to compliance with the ITAR and shall consult with the Department of Commerce regarding any questions relating to compliance with the EAR. (c) The Contractor's responsibility to comply with all applicable laws and regulations regarding export-controlled items exists independent of, and is not established or limited by, the information provided by this clause. * Registration with the State Dept. by a Contractor costs at least $2,750/yr.

  12. DFARS Required Clause, cont’d. (d) Nothing in the terms of this contract adds, changes, supersedes, or waives any of the requirements of applicable Federal laws, Executive orders, and regulations, including but not limited to— (1) The Export Administration Act of 1979, as amended (50 U.S.C. App. 2401, et seq.); (2) The Arms Export Control Act (22 U.S.C. 2751, etseq.); (3) The International Emergency Economic Powers Act (50 U.S.C. 1701, et seq.); (4) The Export Administration Regulations (15 CFR Parts 730-774); (5) The International Traffic in Arms Regulations (22 CFR Parts 120-130); and (6) Executive Order 13222, as extended; (e) The Contractor shall include the substance of this clause, including this paragraph (e), in all subcontracts. (End of clause)

  13. DFARS Guidance – PGI 204.73 PGI 204.73—EXPORT-CONTROLLED ITEMS (Revised April 8, 2010) PGI 204.7302 General (1) DoD Focal Point on Export Controls. Within DoD, the focal point on export controls is the Defense Technology Security Administration (DTSA). Official authorities and responsibilities of DTSA are established in DoD Directive 5105.72. (ii) Initial DoD acquisition workforce questions regarding the applicability of the EAR or the ITAR to specific procurements or items, or interpretation of DoD issuances regarding export controls, may be directed to the DTSA Policy Directorate, by phone at 703-325-3637 or by visiting the DTSA Policy Directorate web site at: http://www.defenselink.mil/policy/sections/policy_offices/dtsa/index.html

  14. DFARS Guidance – PGI 204.73, cont’d. (2) RegulationsThe Department of State and the Department of Commerce are the lead agencies responsible for regulations governing the export of defense articles, commercial items, and dual use items. (i) The International Traffic in Arms Regulations (ITAR), issued by the Department of State, control the export of defense-related articles and services, including technical data, ensuring compliance with the Arms Export Control Act (22 U.S.C. 2751 etseq.). The United States Munitions List (USML) identifies defense articles, services, and related technical data that are inherently military in character and could, if exported, jeopardize national security or foreign policy interests of the United States.

  15. DFARS Guidance – PGI 204.73, cont’d. The ITAR is published in Title 22 of the Code of Federal Regulations, Parts 120 through 130 (22 CFR 120-130). The official version of the ITAR is maintained at http://www.gpoaccess.gov/cfr/index.html. The Department of State also maintains an on-line version at http://www.pmddtc.state.gov/regulations_laws/itar_official.html (B) The USML is part of the ITAR, in 22 CFR Part 121, and is available at the web sites in paragraph (2) (i) (A) of this section.

  16. DFARS Guidance – PGI 204.73, cont’d. (C) The Department of State is responsible for compliance with the ITAR. Depending on the nature of questions you may have, you may contact the following Department of State office to obtain additional information: U.S. Department of State Bureau of Political Military Affairs Directorate of Defense Trade Controls Office of Defense Trade Controls Compliance http://www.pmddtc.state.gov/about/contact_information.html

  17. DFARS Guidance – PGI 204.73, cont’d. (D) Contracting officers should not answer any questions a contractor may ask regarding how to comply with the ITAR. If asked, the contracting officer should direct the contractor’s attention to paragraph (c) of the clause at DFARS 252.204-7008 and may inform the contractor that the Department of State publishes guidance regarding ITAR compliance at http://www.pmddtc.state.gov/compliance/index.html.

  18. DFARS Guidance – PGI 204.73, cont’d. (ii) The Export Administration Regulations (EAR), issued by the Department of Commerce, control the export of dual-use items, (items that have both commercial and military or proliferation applications) and purely commercial items. These items include commodities, software, and technology. Many items subject to the EAR are set forth by Export Control Classification Number on the Commerce Control List.

  19. DFARS Guidance – PGI 204.73, cont’d. The EAR is published in Title 15 of the Code of Federal Regulations, Parts 730 through 774 (15 CFR Parts 730-774), available at http://www.gpoaccess.gov/cfr/index.html and http://www.access.gpo.gov/bis/ear/ear_data.html. (B) The Commerce Control List is part of the EAR, in Supplement No. 1 to 15 CFR Part 774, and is available at http://www.gpoaccess.gov/cfr/index.html and http://www.access.gpo.gov/bis/ear/ear_data.html.

  20. DFARS Guidance – PGI 204.73, cont’d. (C) The Department of Commerce is responsible for compliance with the EAR. Depending on the nature of questions you may have, you may contact the following Department of Commerce office to obtain additional information: U.S. Department of Commerce Bureau of Industry and Security Office of Exporter Services (OExS) OExS Hotline: 202-482-4811

  21. DFARS Guidance – PGI 204.73, cont’d. (D) Contracting officers should not answer any questions a contractor may ask regarding how to comply with the EAR. If asked, the contracting officer should direct the contractor’s attention to paragraph (b) of the clause at DFARS 252.204-7008 and may inform the contractor that the Department of Commerce publishes guidance regarding EAR compliance at http://www.bis.doc.gov/.

  22. DFARS Guidance – PGI 204.73, cont’d. (3) National Security Decision Directive (NSDD) 189, National Policy on the Transfer of Scientific, Technical and Engineering Information. (Synopsis - NSDD 189 establishes a national policy that, to the maximum extent possible, the products of fundamental research shall remain unrestricted. NSDD 189 provides that no restrictions may be placed upon the conduct or reporting of federally funded fundamental research that has not received national security classification, except as provided in applicable U.S. statutes. As a result, contracts confined to the performance of unclassified fundamental research generally do not involve any export-controlled items,as defined in paragraph (a) of the clause at DFARS 252.204-7008) NSDD 189 is available at http://www.fas.org/irp/offdocs/nsdd/nsdd-189.htm.

  23. DFARS Guidance – PGI 204.73, cont’d. (4) DoD Instruction 2040.02, International Transfers of Technology, Articles, and Services. This DoD instruction provides guidance to manage and control transfers of technology, articles, and services consistent with U.S. foreign policy and national security objectives. DoD Instruction 2040.02 is available at http://www.dtic.mil/whs/directives/. (5) Other DoD Issuances. Other DoD issuances that address export control matters include those listed below. Except as otherwise noted, these issuances are available at http://www.dtic.mil/whs/directives/.

  24. DFARS Guidance – PGI 204.73, cont’d. • DoD Publication 5220.22-M, National Industrial Security Program Operating Manual (NISPOM). • DoD Directive 5230.25, Withholding of Unclassified Technical Data From Public Disclosure. • DoD Instruction 5230.27, Presentation of DoD-Related Scientific and Technical Papers at Meetings. • Defense Acquisition Guidebook, available at http://akss.dau.mil/dag/DoD5000.asp?view=document&doc=1 • Under Secretary of Defense (Intelligence) Memorandum, Subject: Policy and Procedures for Sanitization of Department of Defense (DoD) Classified or Controlled Unclassified Information Prior to Public Release, available at http://www.dod.mil/pubs/foi/dfoipo/docs/NewRedactionPolicy.pdf

  25. ITAR/EAR/DFARS – WHY SHOULD I BE CONCERNED? The contracts I deal with do not require the Contractor to export anything, so why should I be concerned? As long as the required DFARS clause is in the contract, what further is required of the Government acquisition person or the Contractor? Isn’t it the State or Commerce Dept’s. responsibility to enforce export laws/regulations?

  26. BASIC RULE EXPORT OF A DEFENSE ARTICLE, DEFENSE DATA, OR PROVISION OF A DEFENSE SERVICE TO A “FOREIGN PERSON” IS ILLEGAL UNLESS THE EXPORTER POSSESSES A VALID U.S. GOVERNMENT APPROVED EXPORT LICENSE OR THE EXPORT IS COVERED BY AN ITAR/EAR EXEMPTION OR EXCEPTION

  27. Foreign Person – Defined – ITAR 120.16 A person who is not a U.S. citizen or a lawful permanent resident of the U.S. (a.k.a. “Green Card” holder) or other specially authorized permanent resident; or A U.S. person representing a foreign company or government; or A foreign government, foreign corporation, or other foreign entity or group that is not incorporated or organized to do business in the United States.

  28. Defense Article – Defined – ITAR 121.17 Any article designated on the U. S. Munitions List (USML) – ITAR Part 121.1; or Technical data recorded or stored in any physical form directly relating to a defense article; or An article or data specifically designed, developed, configured, adapted, or modified for a U. S. military application.

  29. Defense Service – Defined – ITAR 120.9 Assistance in design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of a defense article; or Furnishing defense technical data, whether in the United States or abroad; or Military training including formal or informal instruction in the United States or abroad or by correspondence courses, technical, educational, or info publications and media of all kinds, training aid, orientation, training exercise, and military advice. Excludes training in basic operations and maintenance of lawfully exported defense articles.

  30. Export – Defined – ITAR 121.17 Sending or taking a defense article or defense technical data out of the United States in any manner; or Disclosing, transferring, or providing access to a defense article or defense technical data to a Foreign Person in any location; or Performing a defense service on behalf of, or for the benefit of, a Foreign Person in any location.

  31. Export of Technical Data – ITAR 120.17 Export of Technical Data occurs when you: Transmit or transfer it out of the U.S. – orally or otherwise; or Allow visual inspection by or transfer to a Foreign Person; or Send e-mail containing Technical Data to a Foreign Person; or Permit a Foreign Person to have access to computer databases, drives, or folders where Technical Data resides.

  32. U. S. State Dept. Export Licenses/Agreements – Main Types Defense Services, Technical Data, Software, or Technical Assistance – Technical Assistance Agreement (“TAA”) – Valid up to 10 yr. Defense Articles/Data – Permanent Export - Form DSP- 5 – Valid for 4 yr. Defense Articles/Data – Temporary Export - Form DSP- 73– Valid for 4 yr.

  33. Exports/Sales of Defense Articles/Data to Certain Countries is Prohibited – Includes EAR, ITAR, and OFAC Prohibitions Afghanistan (except to U.S. troops) Belarus Burma China (PRC) Congo Ivory Coast Cuba Cyprus Eritrea Guatemala Haiti Indonesia Iran Iraq (except to U.S. troops) Lebanon Liberia Libya N. Korea Palestinian Auth/Hamas Sierra Leone Somalia Sri Lanka Sudan Syria Venezuela Vietnam Yemen Zimbabwe THIS LIST CHANGES AS LAWS/ORDERS CHANGE OFAC also publishes a Specially Designated Nationals and Blocked Persons (SDN) List monthly.

  34. Miscellany/Cautions Taking an electronic device with resident ITAR controlled data/software out of the U. S. is an export. Non-gov. personnel - be sure you have the proper authorization/license. Placing controlled technical data on a server, network drive, or unsecured portal/FTP site that is accessible by foreign persons is considered an export whether or not a foreign person actually accesses the site.

  35. ITAR/EAR/DFARS – WHY SHOULD I BE CONCERNED? ANSWERS Q - The contracts I deal with do not require the Contractor to export anything, so why should I be concerned? A - If your company or a Contractor with which you deal: employs “Foreign Persons”, any export controlled data/article to which they have access is deemed an “Export” and the appropriate license is needed; provides general public access to its products at trade shows, expositions, etc. and any of the products is a defense article, an export may take place; or has foreign subsidiaries, a foreign parent, or foreign offices with which it shares technical data, or provides assistance or hardware, a TAA or other license may be necessary even if the end product is destined for the U.S., then the DFARS clause could apply.

  36. ITAR/EAR/DFARS – WHY SHOULD I BE CONCERNED? ANSWERS Q - As long as the required DFARS clause is in the contract, what further is required of the Contractor or Government acquisition person? A - To comply with the DFARS requirements and if the Contractor exports data or articles, it is prudent for each effected company to register with the State Dept. and set up an export compliance program to ensure laws/regulations are being followed. A - To monitor compliance with the DFARS requirements, it is necessary for all U.S. Government acquisition personnel to have at least a rudimentary knowledge of export laws/regulations.

  37. ITAR/EAR/DFARS – WHY SHOULD I BE CONCERNED? ANSWERS Q - Isn’t it the State or Commerce Dept’s. responsibility to enforce export laws/regulations? A - Not really – compliance and enforcement are the duties of all those effected by such laws/regulations. If the DFARS export clause is in the contract, monitoring of compliance is both a Government and contractor duty. A - When a company is “caught” violating export laws/regulations, it may be too late to avoid fines or loss of export/contracting privileges.

  38. Useful Export Related Services & Websites Government Sponsored Websites – all free Bureau of Industrial Security, U.S. Commerce Dept. - http://www.bis.doc.gov/ Directorate of Defense Trade Controls, U.S. State Dept. - http://www.pmddtc.state.gov/ U.S. Treasury Dept., Office of Foreign Assets Control - http://www.ustreas.gov/offices/enforcement/ofac/ U.S. Defense Threat Reduction Agency (DTRA) - http://www.dtra.mil/

  39. Useful Export Related Services & Websites Government Sponsored Websites – all free, cont’d. Excluded Parties List System - https://www.epls.gov/ U.S. Census Bureau, foreign trade office - http://www.census.gov/foreign-trade/index.html Export.gov - http://www.export.gov/index.asp Link to online training on export controls: “CLM 036 Technology Transfer and Export Control Fundamentals”, https://learn.dau.mil/html/clc/Clc1.jsp.

  40. Useful Export Related Services & Websites, cont’d. Non-Government Sponsored Websites Society for International Affairs (SIA) – training, newsletter, & events – membership available (reasonable cost) - http://www.siaed.org/ Association of Trade Compliance Professionals – training & newsletter - membership available (reasonable cost) - http://complianceprofessionals.org/ Tools and Resources - membership free - http://learnexportcompliance.com/tools/ Centre for Export Excellence – international training & events – fee for each event - http://cfece.com/

  41. Useful Export Related Services & Websites, cont’d. Free Newsletters Ex/Im Daily Update – E-mail subscription request to james.bartlett@NGC.com. Request must come from the e-mail address to be subscribed. Please include full professional contact info (name, title, company, address, and telephone). Defense and Export-Import Update - E-mail name, title, company, and e-mail address to gstanley@glstrade.com OCR Services Newsletter - http://www2.ocr-inc.com/newweb/News/NewsLetter.aspx

  42. THANKS FOR YOUR PARTICIPATION QUESTIONS?

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