RESTRICTIVE TROUBLESOME CLAUSESIMPACTING EXPORT COMPLIANCE Various Federal Agencies
EXPORT REGULATIONS: • “Real” exposure for universities • Effect more intense & sweeping since 9/11 • Applicable Rules & Regs are complex & often difficult to interpret & apply • Not just Sponsored Programs impact. Across the institution.
COGR/AAU Troublesome Clause Survey of 2003-2004 • Recently updated • Situation (frequency/type of restriction encountered) has not improved. Expansion in scope & nature of controls received. • New types of restrictions also reported, especially “sensitive but unclassified” and background checks requirements.
QUICK REVIEW • EXPORT – defined as any oral, written, electronic or visual disclosure, shipment, transfer or transmission of commodities, technology, information, technical data, assistance or software codes to * anyone outside the US including a US citizen * a non-US individual wherever they are (“deemed export”) * a foreign embassy or affiliate • DEEMED EXPORT – transfer of controlled technology to “foreign persons”, (usually in the US), where the transfer is regulated because it is “deemed” to be to the country where the person is a resident or a citizen.
QUICK REVIEW • Deemed Export can commonly be released through: • Visual Inspection by foreign nationals of US origin equipment and facilities. • Oral exchanges of information in the US or abroad. • Application to situations abroad of personal knowledge or technical experience acquired in the US. • NOTE: Concept of Deemed Export applies to information and technical data, not to actual controlled materials or items without any associated information.
Primary US laws/regs governing Export Control: • International Traffic in Arms (ITAR) (Dept of State) Directorate of Defense Trade Controls (DDTC) • Export Administration Regulations (EAR) (Dept of Commerce) Bureau of Industry & Security (BIS) • Office of Foreign Assets Control (OFAC) (Dept of Treasury)
ITAR • Controls export of “Defense Articles” and “Defense Services” • Military Hardware, Systems, Equipment, Weapons, Missile and Satellite technology, WMDs including Chemical & Biological Agents • Specifically designed, developed, configured, adapted or modified for a military application, and, designating and determining defense articles and services, • Does not have predominant civil application, and • Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or -- Is specifically designed, developed, configured, adapted, or modified for a military application and has significant military or intelligence applicability such that control under the ITAR is necessary
ITAR • Items categorized on the ITAR MUNITIONS LIST (USML) • “Defense Services” include furnishing assistance to foreign persons, whether or not in the US, with respect to defense articles, and furnishing of any technical data associated with a defense article. • http://www.fas.org/spp/starwars/offdocs/itar/p121.htm
EAR • Covers commercial technologies • Covers “dual use” technologies, i.e. predominantly civilian uses but also have military and proliferation applications, or may be used in terrorist activities. • Items categorized on the Commerce Control List (CCL) - ten broad categories. • Specific restrictions depend on specific technology and where it is being exported. • http://www.access.gpo.gov/bis/ear/ear_data.html
OFAC • Administers sanctions that apply to certain nations • Regulates transfer of assets or services to those countries (sanctions – freezing assets) • May prohibit travel/other activities with sanctioned countries & persons even when exclusions to EAR/ITAR apply • http://www.ustreas.gov/offices/enforcement/ofac/
FUNDAMENTAL RESEARCH EXEMPTION • Both ITAR & EAR include language that excludes the results of “Fundamental Research” from requirements for export licenses or other government approval. • The exclusion applies to basic and applied research in science and engineering performed by US accredited institutions of higher learning so long as that research is carried out openly and without restrictions on publications, disseminations or foreign national access.
FUNDAMENTAL RESEARCH EXEMPTION • The research-generated information is ordinarily published and shared broadly in the scientific community, as distinguished from research results which are restricted for proprietary reasons or specific US government access and dissemination controls. • The products of fundamental research are not subject to export license requirements or other government approval.
OTHER EXCLUSIONS • Exclusions for Information that is Publicly Available or in the Public Domain. • ITAR: already published • EAR: “will be published” Examples: open libraries, published patents, conferences, trade shows open to public, websites • Educational Exclusions from EAR and ITAR • The BONA FIDE EMPLOYEE exemption
Clauses of Concern • Primarily relate to two areas: • Control of publications/release of information via review and approval by the agency. • Restriction on access to program technical data, information, hardware, systems, etc. by foreign nationals (i.e. non US citizens, non “Greencard” holders) • Most often encountered in awards from DoD agencies, although found in other agencies’ documents. Primarily in contracts, although now encountered at times in grants and cooperative agreements. • Bit more success in negotiating direct awards from the feds versus subcontracts from primes.
Extract from the EARs defining“Specific National Security Controls” 734.11 Government-Sponsored Research Covered by Contract Controls (b) Examples of “specific National Security Controls” include requirements for prepublication review by the Government, with right to withhold permission for publication; restrictions on prepublication dissemination of information to non-US citizens or other categories of persons; or restrictions on participation of non-US citizens or other categories of persons in the research.
DFAR 252.204-7000 204.404-70 Additional contract clauses (a) Use the clause at 252.204-7000, Disclosure of Information, in solicitations and contracts when the contractor will have access to or generate unclassified information that may be sensitive and inappropriate for release to the public. 252.204-7000 Disclosure of Information As prescribed in: 204.404-70(a),use the following clause: DISCLOSURE OF INFORMATION (DEC 1991) (a) The Contractor shall not release to anyone outside the Contractor's organization any unclassified information, regardless of medium (e.g., film, tape, document), pertaining to any part of this contract or any program related to this contract, unless- (1) The Contracting Officer has given prior written approval; or (2) The information is otherwise in the public domain before the date of release.
DFAR 252.204-7000 b) Requests for approval shall identify the specific information to be released, the medium to be used, and the purpose for the release. The Contractor shall submit its request to the Contracting Officer at least 45 days before the proposed date for release. (c) The Contractor agrees to include a similar requirement in each subcontract under this contract. Subcontractors shall submit requests for authorization to release through the prime contractor to the Contracting Officer
AFMC 5352.227-9000EXPORT-CONTROLLED DATA RESTRICTIONS 5327.9002 Provisions and clauses. (a) Insert the clause at 5352.227-9000, Export-Controlled Data Restrictions, substantially as written, in Section I when the acquisition involves export controlled data. AFMC 5352.227-9000 EXPORT-CONTROLLED DATA RESTRICTIONS (AFMC) (JUL 1997) (a) For the purpose of this clause, (1) Foreign person is any person who is not a citizen or national of the US or lawfully admitted to the US for permanent residence under the Immigration and Nationality Act, and includes foreign corporations, international organizations, and foreign governments; (2) Foreign representative is anyone, regardless of nationality or citizenship, acting as an agent, representative, official, or employee of a foreign government, a foreign-owned or influenced firm, corporation or person; (3) Foreign sources are those sources (vendors, subcontractors, and suppliers) owned and controlled by a foreign person. (b) The Contractor shall place a clause in subcontracts containing appropriate export control restrictions, set forth in this clause.
AFMC 5352.227-9000EXPORT-CONTROLLED DATA RESTRICTIONS (c) Nothing in this clause waives any requirement imposed by any other US Government agency with respect to employment of foreign nationals or export controlled data and information. (d) Equipment and technical data generated or delivered under this contract are controlled by the International Traffic in Arms Regulation (ITAR), 22 CFR Sections 121 through 128. An export license is required before assigning any foreign source to perform work under this contract or before granting access to foreign persons to any equipment and technical data generated or delivered during performance (see 22 CFR Section 125). The Contractor shall notify the Contracting officer and obtain written approval of the Contracting Officer prior to assigning or granting access to any work, equipment, or technical data generated or delivered under this contract to foreign persons or their representatives. The notification shall include the name and country of origin of the foreign person or representative, the specific work, equipment, or data to which the person will have access, and whether the foreign person is cleared to have access to technical data (DoD 5220. 22-M, National Industrial Security Program Operating Manual (NISPOM)).
52-227-4004 (TACOM)RELEASE OF INFORMATION The contractor shall ensure that he complies with the requirements of Ch 5, p.22, paragraph 5-48, of AR 306-1, The Army Public Affairs Program, dtd 15 Sept 2000, prior to contemplated release of any procurement information. Approval of the Contracting Officer is required prior to release of any such information. AR 360-1 may be found at: http://www.usapa.army.mil/pdffiles/r360_1.pdf (Procedures for reviewing and clearing material are at appendix D of ARO 360-1)
APPENDIX DARO 360-1(extract) Clearance & Release of Contractor Materials & Info D-1 c. Department of the Army agencies or educational institutions will not release procurement information on Army contracted research and development projects without prior approval or clearance. e. When unclassified contracts do not give specific instructions on releasing information, contractors should submit informational materials prior to publication to a PA (Public Affairs) office designated by the administrative contracting officer. If the submission is made to any other office, it will be referred immediately to the proper ACO for action (review & approval).
APPENDIX DARO 360-1(extract) D-2 b. Scientific and technical information will not be released if it discloses classified military applications or, if unclassified, disclosure would be adverse to the national interest. c. Export and ITAR restrictions may also govern release of certain information…Approval from OASD is required for such a release.
FAR 52.227-17 RIGHTS IN DATA – SPECIAL WORKS “…(d) Release and use restrictions. Except as otherwise specifically provided for in this contract, the Contractor shall not use for purposes other than the performance of this contract, nor shall the Contractor release, reproduce, distribute, or publish any data first produced in the performance of this contract, nor authorize others to do so, without written permission of the Contracting Officer.
WHAT IMPACT IF ABOVE ACCEPTED? • By agreeing to these clauses as written, the institution is effectively waiving its normal “Fundamental Research Exemption” and would be liable for compliance with all applicable Export Regulations. • Contradicts Free Publication and Dissemination as inherent principals of academic pursuit and mission. • If not clearly a “Classified” program, restrictions on foreign persons working on or having access to program technology and data could be interpreted as violating institutional non-discrimination policies. • If institution eventually found in violation of Export Regulations, at a minimum significant penalties and fines.
The “SUTI/SBU” Problem • “Sensitive But Unclassified Technical Information” • Who can define it? • When can/would it be defined? • What, if any, are the limits of government discretion? • Does one assume the government will act arbitrarily? • Gov’t will indicate “Although the work is R&D we do not know what path it will take therefore in case it develops into something non-fundamental they are protected.
THE COLOR OF MONEY • DoD has confirmed that the type of appropriation funding the effort should determine whether inclusion of various restrictive clauses should occur. • For 6.1 and 6.2 funding, restrictive clauses seen above should not be included. • There has been an obvious inconsistency and disconnect between DoD level (Pentagon) policy and the interpretation and implementation by various acquisition level commands (e.g. TACOM).
FYIDoD Funding Categories • 6.1 Funding Basic Research • 6.2 Funding Applied Research • 6.3 Advanced Technology Development • 6.4 Demonstration and Validation
National Security Directive NSDD 189 (September 1985) States the products of fundamental research remain free from publication or other restrictions, and that the correct mechanism for control of information generated during federally funded fundamental research in science, technology and engineering at colleges, universities and laboratories is classification. Confirmed in November 1, 2001 Memo by Condoleezza Rice
System Tools for Export Compliance Program • Develop your own system to search and check all applicable databases (ITAR Munitions List, EAR CCL, Restricted Party Screening, Country Search, etc.) and create a permanent record to prove due diligence. • ListVUe– developed and marketed by Vanderbilt University. • VISUAL COMPLIANCE – developed and marketed by ECUSTOMS. • Others???
Institution’s Export Compliance Function • Where to locate? • VP Research / Sponsored Programs? • Institutional Compliance Office? • Legal Affairs? • Provost? • Questions to ask: -How staffed? Who funds? Who has real expertise? Where is greatest impact/occurrence? Where best to oversee the entire institution? – most frequent export compliance problem could be in individual PI travel, not necessarily in sponsored programs?
Non-Regulatory Pressures to Accept Troublesome Clauses • Quantum (bottom line amounts can be very enticing if large enough) • PI pressure (“no one else funds my kind of research…”) • POLITICS - EARMARKS • Other? “Thanks for attending and participating!”