ABA-PCL Sees Potential ITAR Compliance Problems in Defense Treaty with U.K.
A provision of the Defense Department’s regulations implementing the Defense Trade Cooperation Treaty that gives DoD officials a role in determining whether items can be exported according to the terms of the Treaty, or are instead disallowed because of International Traffic in Arms Regulations limitations, could cause compliance problems for exporters, said the American Bar Association Section of Public Contract Law (ABA-PCL) in comments on DoD’s May interim rule. “The regime has the potential for confusion, particularly because most DoD contracting officers and program managers have relatively little formal training in export controls, and there is no explicit ‘safe harbor’ provision allowing reliance on DoD determinations,” said ABA-PCL.
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The Defense Trade Treaty allows defense articles to move freely to the U.K. if the project or transaction is covered by the Treaty, without the need for separate ITAR authorizations. The ITAR contains an Exempted Technology List of articles that are not covered by the Treaty at Supplement No. 1 to Part 126. Before exporting under the Treaty, exporters must confirm to the State Department’s Defense Directorate of Trade Controls that the project associated with the export is on the list of approved projects, is for U.S. government end use or certain agreed upon U.K. uses, and that the defense article otherwise subject to a licensing requirement is not on the ITAR Exempted Technology List, ABA-PCL said.
The interim rule says DoD contracting officers and program managers will play a role in identifying solicitations and requests for proposal that may be subject to Treaty treatment and determining whether a line item is subject to the Treaty or instead carved out. In effect, said ABA-PCL, the interim rule “grants DoD the legal authority to make de facto ITAR jurisdictional determinations regarding whether a particular product or service is eligible for (or precluded from) Treaty treatment.”
The problem, according to ABA-PCL, is that “the only government entity that can make a definitive determination is DDTC.” If DoD personnel make incorrect determinations on applicability of the Treaty to an article, “a contractor will either be precluded from exercising its own judgment to utilize the exemption, or the contractor may incorrectly utilize the exemption (because DoD thinks it is applicable) and run the risk of disagreement or enforcement by DDTC based upon this incorrect determination.”
Therefore, said ABA-PCL, DoD and DDTC should set up a consultation mechanism and allow exporters to rely on DoD determinations of whether an article is subject to the Treaty. “We believe that such an approach -- in effect, a safe harbor -- would serve to minimize confusion and promote greater compliance with the ITAR’s implementation of the Treaty,” ABA-PCL said.
Comments on the interim rule are here.
(See ITT’s Online Archives 12052207 for summary of DoD’s interim rule implementing the Defense Trade Treaty with the UK. Comments were due July 23.)