Transcript Document

JSF Licensing
October 26, 2011
Lt Col Kris Eggehorn
Directorate of Defense Trade Controls
DISCUSSION TOPICS
• JSF Licensing at a Glance
• Sustainment Construct
Licensing Construct
• Offer an export licensing construct for JSF
sustainment that leverages existing licensing
processes with obtainable efficiencies
• Caveats:
– Socialized among staff from DDTC, DTSA, JSFPO,
Lockheed Martin Corp, United Technologies, and IMSG
• Currently focused on air vehicle
• Applicable across the weapon system
– Construct is a work in progress
JSF Licensing at a Glance
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Nine partner nations (DCS)
Additional sales territories (FMS)
Numerous foreign production locations
500+ Approved Development/
Production licenses
JSF Sustainment
• Global Logistics Construct
– Real time management by Lockheed Martin
team using ALIS (Autonomic Logistics
Information System)
– Deliver replacement parts worldwide using
Global Distribution Centers
• Complexities of global logistics
construct warrants efficiencies in
licensing
Licensing Foundations
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Applicant**
Commodity**
End-user – MODs and industry**
End-use**
Compliance
– Reporting
– Verification
**already established by JSF program
Affected Defense Articles
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Unclassified, non-SME
Unclassified, SME*
Classified*
Non-U.S. sourced articles
Non-U.S. derived articles
*Additional End Use Assurances Required (usually a
DSP-83)
Sustainment Authorizations
• Technical Assistance Agreements (TAAs)
– Defense services
• Manufacturing License Agreements (MLAs)
– Foreign manufacturing
• Warehouse Distribution Agreements (WDAs)
– Foreign distribution centers
• Subject defense articles (DSP Licenses)
– Exports from CONUS
– Non-U.S. sourced
• Retransfers amongst partnership
Technical Assistance
Agreement (TAA)
• Training
– Pilot
– Maintenance
• Flight test
• ALIS
– Managing database
– IT support
• Traditional processes sufficient
Defense Articles
Management
• Exports from CONUS
– Program DSP-5s (unclassified) and DSP-85s
(classified)
• Non-U.S. sourced
– Procured abroad under currently approved TAA
or MLA
• Require amendment to expand sales territory
• Non-U.S. derived articles
– ITAR-controlled upon entry into U.S.
– Integration into ITAR-controlled articles
Retransfer
• Transfer from the Distribution Centers
– To end-user’s military bases and other Distribution
Centers (covered under Distribution Agreements
for unclassified and classified defense articles)
– To non-U.S. sources (covered under amended TAA
or MLA)
• Repair/replacement and maintenance
– U.S.-origin defense articles
• DSP-5, DSP-85
• TAA or MLA
– Non-U.S. sourced articles
Retransfer (cont’d)
• Amending TAA or MLA
– Allow direct shipment to Distribution
Center or end-user military bases
– Repair and replacement, maintenance of
procured defense articles
– End-use assurances executed under
agreement applicable to sustainment
activities
End-Use Assurances
• Distribution Centers
– Incorporated into their distribution
authority
• End-user (i.e., partner governments)
– Overarching assurances
• Non-U.S. sources
– Pursuant to amended TAA or MLA
Compliance
• Export construct contingent on ALIS
capability for tracking and reporting of
all transfers
– Tracking
– Electronic Reporting
– Tailored ALIS access for DDTC and DTSA
• Disclosure process for unauthorized
access and/or transfer
Summary
• First steps
– Identified the requirements for the
sustainment construct
– Review of potential mechanisms
• Final construct is not set in stone
– Is driving a review of overall licensing
requirements
– Congressional notification implications
• Large programs like JSF demand
smarter licensing
Backup Charts
Regulation Updates
• Pending Actions
– USML Category Revisions
• VI, VII, VIII – public comment forthcoming
• XIX – new engine category
• Proposed Rules
– Spare Parts Exemption 22 CFR 123.28
– “See Through” Rule Clarification
Regulation Updates
• Future Actions
– Discontinuation of DSP-53
– Defense Service Definition
– Part 124 Re-write
Definition of DN/TCN
Dual/Third Country Nationals (DN/TCN)
– DN – An individual who holds nationality from the country of their
employer who is a foreign licensee (or sublicensee) to the
agreement, and also holds nationality from one or more additional
countries
– TCN – An individual who holds nationality from a country other than
the country of their employer who is a foreign licensee (or
sublicensee) to the agreement
– When determining nationality, the Department of State does
consider the country of origin or birth in addition to citizenship
– Export of defense articles or services to a foreign person, inside or
outside the U.S., is adjudicated as if it were an export to that foreign
country. However:
• Approval of a Dual/Third Country National employee only authorizes transfer to
that employee. It does not authorize export to the country from which
the employee derives.
Implementing Federal Register
Notice 7428 “Big Picture”
• Provides options for the vetting of dual and/or third
country national employees
– New 22 CFR 126.18 implementation
– Utilize current policy (specific country identification)
• U.S. agreement holder is responsible for
coordinating with the foreign licensees which
option will be utilized and ensure the appropriate
language is included
• Either way requires change to 22 CFR 124.8(5) for
all TAAs/MLAs.
Required Change:
22 CFR 124.8(5) Clause
• Updated 22 CFR 124.8(5) for all TAAs/MLAs
“(5) The technical data or defense service exported
from the United States in furtherance of this
agreement and any defense article which may be
produced or manufactured from such technical data
or defense service may not be transferred to a
foreign person except pursuant to §§124.16 and
126.18, as specifically authorized in this agreement,
or where prior written approval of the Department
of State has been obtained.”
Optional Change:
22 CFR 124.7(4) Statement
• 22 CFR 124.7(4) requires the identification of all
countries of transfer
• New required statement for delegation of DN/TCN
vetting
“Transfers of defense articles, to include technical data,
to dual nationals and/or third country nationals by
foreign licensees (and its approved sublicensees – if
applicable) must be conducted in accordance with the
provisions of 22 CFR 124.8(5).”
• Will replace the separate paragraphs for 22 CFR
124.16 and 22 CFR 124.8(5)
22 CFR 124.16 Overview
Dual/Third Country Nationals (DN/TCN) – 22 CFR 124.16
– The provisions of 22 CFR 124.16 for Dual/Third Country National
employee(s) are applicable only if all of the following criteria are
met:
• The Dual/Third Country National employee does not hold nationality
from any other country outside those countries prescribed under 22 CFR
124.16
• The foreign signatory or approved sub-licensee is located inside those
countries prescribed under 22 CFR 124.16
• Only access to unclassified technical data, defense services, and defense
articles for the Dual/Third Country National Employees will occur
• Any retransfer between the foreign signatory or approved sublicensee(s) and dual/third country national employees of the foreign
signatory or approved sub-licensee(s) must take place completely within
the physical territories of those countries prescribed under 22 CFR
124.16
22 CFR 126.18 Overview
Dual/Third Country Nationals (DN/TCN) – 22 CFR 126.18
– If the criteria of 22 CFR 124.16 does not apply, DN/TCNs may be
handled per 22 CFR 126.18:
A) Security Clearance issued by the foreign licensee’s government,
or
B) Individual is screened by the foreign licensee and a NonDisclosure Agreement (NDA) is executed.
• Make determination on substantive contacts with restricted or proscribed
countries in 22 CFR 126.1
• Determine risk of diversion
C) May provide details of screening on specific individuals to DDTC
for final determination
– Limited to unclassified defense articles or technical data
22 CFR 124.8(5) Option
• 22 CFR 126.18(c)(2) affords the option for DDTC to make
the determination on substantive contacts
• Should be requested in accordance with 22 CFR 124.8(5)
(as specifically authorized in this agreement)
– Follow the current guidance
– Support Documentation
• Full legal name of specific individual, date/place of birth, copy of
passport, resume, and a detailed job description
• Information concerning substantive contact concerns
• Specific to that agreement only!
General Correspondence Option
• 22 CFR 126.18(c)(2) affords the option for DDTC to make
the determination on substantive contacts
• Should be requested in accordance with 22 CFR 124.8(5)
(“where prior written approval of the Department of State
has been obtained”)
• Submitted by foreign licensee (employer)
– Support Documentation
• Full legal name of specific individual, date/place of birth, copy of
passport, resume, and a detailed job description
• Information concerning substantive contact concerns
• Applicable to any future agreement
– Copy of GC provided to applicant upon request
Classified Transactions
• 22 CFR 124.16 and 22 CFR 126.18 are limited to unclassified defense
articles and/or technical data
• Any dual/third country nationals requiring access to classified defense
articles and/or technical data must be requested in accordance with 22
CFR 124.8(5) and identified by country in the agreement (as specifically
authorized in this agreement)
• 22 CFR 124.7(4) should include the following language:
– “Pursuant to 22 CFR 124.8(5), this agreement authorizes access to
classified defense articles and/or retransfer of technical
data/defense services to individuals who are dual/third country
national employees of the foreign licensees and the approved
sublicensees. The exclusive nationalities are limited to: insert
country list. These individuals are required to execute a NonDisclosure Agreement (NDA) which will be maintained by the
applicant for 5 years in accordance with 22 CFR 122.5.”
Country Specific Clauses
• The country specific clauses for Canada, Australia and The
Netherlands are predicated on the issuance of a security
clearance by the respective government.
• If implementing the new policy these clauses are no longer
necessary as the requirements are met at 22 CFR 126.18(c)(1)
covering security clearances
• If retaining and/or utilizing the current policy these clauses are
still relevant and may be used as desired by Canada, Australia or
The Netherlands
• If authorization includes classified, these clauses are still
applicable and may be used
Contractor Labor Clause
• Current language is unchanged by the new policy
– “Contract employees to any party to the agreement hired through a staffing
agency or other contract employee provider shall be treated as employees
of the party, and that party is legally responsible for the employees’ actions
with regard to transfer of ITAR controlled defense articles to include
technical data, and defense services. Transfers to the parent company
by any contract employees are not authorized. The party is further
responsible for certifying that each employee is individually aware of their
responsibility with regard to the proper handling of ITAR controlled defense
articles, technical data, and defense services.”
• “Contract employee” does not equal “regular employee”
• The new dual/third country national policy is applicable to
contract employees (pursuant to 22 CFR 120.39)
Part 120 - Definitions
• Regular Employee – 120.39
– Individual permanently and directly employed by the
company, or
– Individual in a long term contractual relationship with
the company where he/she:
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Works at the company’s facilities
Works under the company’s direction / control
Works full-time and exclusively for the company
Executes NDA
– Staffing agency that seconded the individual has no:
• Role in the work performed
• Access to any controlled technology (without authorization)
Non-Disclosure Agreement
Elements of a Non-Disclosure Agreement (NDA)
– Acknowledge Understanding of Parts 120-130 and that retransfer will not
take place without DDTC approval
– 22 CFR 124.8 clauses for TAA
– 22 CFR 124.8 and 22 CFR 124.9 clauses for MLA
– Contract Labor clause can be added
• For 22 CFR 126.18 DN/TCNs not holding a clearance
• For individuals requested pursuant to 22 CFR 124.8(5)
• For transactions not meeting 22 CFR 124.16/22 CFR 126.18