LESSON 8 International Traffic in Arms Regulation and Export Administration Regulation (Export Controls) 15November2013 Lesson 4: Safety Stock

Lesson Introduction Given a contract with export requirements, the student will be able to relate the Defense Contract Management Agency (DCMA) surveillance responsibilities relative to the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR).

Lesson Objectives Upon completion of this lesson, you should be able to: Identify the difference between ITAR and EAR with regard to export controls. Recognize United States (U.S.) Export License stipulations relative to export controls. Differentiate between the terms “U.S. Person” and “Foreign Person” relative to export controls. Identify an export within a contractual requirement. Identify controlled items with regard to export controls. Recognize ITAR’s effect on the DCMA in the performance of certain Quality Assurance (QA) surveillance functions. Lesson 4: Safety Stock

Lesson Topics This lesson covers the following topics: ITAR and EAR Guidelines Export Licenses/Exemptions What Constitutes an Export Types of Controlled Exports QAS Surveillance Responsibilities

WIIFM? Introduce export controls to Help avoid inadvertent mistakes that could result in severe penalties or loss of job. Protect national defense information and the U.S. overall.

ITAR and EAR Guidelines Lesson Topics: ITAR and EAR Guidelines Export Licenses/Exemptions What Constitutes an Export Types of Controlled Exports QAS Surveillance Responsibilities

Topic 1: ITAR and EAR Guidelines ITAR - Controls export of defense items (data, services, etc.) EAR - Controls export of items used in military and non-military capacity

ITAR Authority ITAR 22 Code of Federal Regulation (CFR) 120-130 Overarching authority for ITAR: Public Law (PL) 94-329, Arms Export Control Act (AECA) of 1976, as amended (22 USC 2751 et seq.) ITAR 22 Code of Federal Regulation (CFR) 120-130 Regulates Export of: Defense articles Technical data Defense services Controlled by U.S. State Department - Directorate of Defense Trade Controls (DDTC) Violation Penalties Criminal (Entities) Up to $1M Criminal (Individuals) Up to $1M/10 years Civil Fines Up to $500K and forfeitures Removal from federal service

Removal from federal service EAR Authority Overarching authority for EAR: PL 96-72, Export Administration Act (EAA) of 1979, as amended (50 USC 2401 et seq.) EAR 15 CFR 730-774 Regulates Export of “dual use” (i.e., suitable for military and non-military use), found on Commerce Control List (CCL) Controlled by U.S. Department of Commerce Bureau of Industry and Security (BIS) Violation Penalties Criminal (Entities) Up to $1M Criminal (Individuals) Up to $250K/10 years Civil Fines $10K - $100K Removal from federal service

Removal from federal service ITAR and EAR Compared ITAR 22 CFR 120-130 EAR 15 CFR 730 - 774 Regulates Export of: Defense articles Technical data Defense services Export of “dual use” (i.e., suitable for military and non-military use), found on Commerce Control List (CCL) Controlled by U.S. State Department - Directorate of Defense Trade Controls (DDTC) U.S. Department of Commerce Bureau of Industry and Security (BIS) Violation Penalties Criminal (Entities) Up to $1M Criminal (Individuals) Up to $1M/10 years Up to $250K/10 years Civil Fines Up to $500K and forfeitures $10K - $100K Removal from federal service

Department of Defense ITAR/EAR Authority Under Secretary AT&L Under Secretary Policy DUSD (TSP&NDP) DTSA Under Secretary Intelligence Department of State DDTC Department of Commerce BIS Defense Technology Security Administration AECA ITAR U.S. Munitions List (USML) EEA EAR Commerce Control List (CCL)

Authority DoD adds Defense Federal Acquisition Regulation Supplement (DFARS) clauses 252.225-7901 and 252.225-7048 to raise awareness Imposes obligation on the Requiring Activity to determine if supplier is expected to generate or require access to export-controlled items

Contract Clauses DFARS 252.225-7048 Mandatory for all contracts; suppliers must flow down requirements to subcontractors/vendors Imposes obligation on supplier to comply with applicable laws and regulations regarding export-controlled items

Question and Answer Which U.S. agency is responsible for export control under the EAR 15 CFR 730-774? Department of State Department of Labor Department of Treasury Department of Commerce

Export Licenses/Exemptions Lesson Topics: ITAR and EAR Guidelines Export Licenses/Exemptions What Constitutes an Export Types of Controlled Exports QAS Surveillance Responsibilities

Topic 2: Export Licenses/Exemptions ITAR export controls U.S. person Foreign person End-use and end-user

Export Controls (1 of 3) ITAR controls exports: Of defense articles, defense services, and related technical data From the U.S. to foreign destinations To foreign persons located domestically and abroad

Export Controls (2 of 3) U.S. Person No export license required A U.S. citizen Holds lawful permanent resident status (green card) Is a “protected person” or refugee under the U.S. Asylum Program No export license required

Export Controls (3 of 3) Foreign Person Export license required Foreign Government, offices, and embassies Ambassador U.S. person representing foreign entity Foreign Supplier/Vendor Holds a student or work visa Export license required

U.S. Export License Requirements End-use and end-user specific for: Parties listed on the license Parties in countries listed on the license Identified end-use on the license State Department responsible for supplier’s licensing compliance Some form of authorization is required to export controlled items to ANY foreign person.

Question and Answer Which of the following individuals is classified as a “foreign person?” U.S. citizen representing a Chinese business Toyota executive from Japan Filipino student attending Yale I II II and III I, II, and III

What Constitutes an Export Lesson Topics: ITAR and EAR Guidelines Export Licenses/Exemptions What Constitutes an Export Types of Controlled Exports QAS Surveillance Responsibilities

Topic 3: What Constitutes an Export Export definition Types of exports

E X P O R T An Export Defined Transfer of anything to a foreign person by any means, anywhere, anytime Knowledge that an item being transferred to a U.S. person who then transfers/exports to a foreign destination/person T R O P X E

Two Types Of Exports Intangible Tangible Electronic Oral Visual Physical Visual

Question and Answer Which item would MOST LIKELY be considered an export within the contractual requirements for a U.S. citizen? Sending a package to a relative in Chicago while visiting Italy Explaining the company's valve redesign to a co-worker onsite in Malaysia Discussing a project's grinding specifications with an old friend working for Toshiba in Tokyo Explaining a weapon systems' technical manual to a coworker in Virginia through teleconference

Types of Controlled Exports Lesson Topics: ITAR and EAR Guidelines Export Licenses/Exemptions What Constitutes an Export Types of Controlled Exports QAS Surveillance Responsibilities

Topic 4: Types of Controlled Exports Controlled exports include: Defense articles Defense services Technical data

Defense Articles 22 CFR 121, U. S. Munitions List (USML) Ordnance Aircraft Military training equipment Chemical/Biological agents Nuclear weaponry Tooling Launching vehicles Projectiles

Defense Services

Defense Services - Examples Training a foreign person to use repair manuals Collaborative discussion to explain key concepts or methodologies Installing military software into a foreign system

Classified Information Technical Data Defense Article Design Information Classified Information Software

Technical Data (cont.) DCMA is NOT authorized to distribute technical orders or data to foreign suppliers.

Question and Answer Which item(s) are considered controlled exports? Defense articles Defense services Civilian building codes III I and II II and III I, II, and III

QAS Surveillance Responsibilities Lesson Topics: ITAR and EAR Guidelines Export Licenses/Exemptions What Constitutes an Export Types of Controlled Exports QAS Surveillance Responsibilities

Topic 5: QAS Surveillance Responsibilities QAS surveillance includes: QAS awareness Limited DCMA involvement

QAS Awareness Host Nation Agreements do NOT act to exempt Host Nation activities from export control restrictions. ITAR affects DCMA’s ability to rely on Locally Engaged Staff (LES) and Host Nation personnel to perform certain functions.

Points of Emphasis DCMA is not required to perform surveillance of supplier's compliance with ITAR restrictions. DCMA should ensure proper flow down of requirements via supplier's subcontract management process.

Question and Answer Which of the following are QAS surveillance responsibilities in relation to ITAR? Ensure proper requirements flow down Assure supplier's compliance with export restrictions Review Host Nation's QA activities Authorize Host Nation QA surveillance for export controlled items

Summary Having completed this lesson, you should now be able to: Identify the difference between ITAR and EAR with regard to export controls. Recognize U.S. Export License stipulations relative to export controls. Differentiate between the terms “U.S. Person” and “Foreign Person” relative to export controls. Identify an export within a contractual requirement. Identify controlled items with regard to export controls. Recognize ITAR’s affect on the DCMA in the performance of certain QA surveillance functions. Lesson 4: Safety Stock

Questions

Review Question 1 Which U.S. agency is responsible for export control under the ITAR 22 CFR 120 – 130? Department of State Department of Labor Department of Treasury Department of Commerce

Review Question 2 Which statement about U.S. persons is INCORRECT? They are also a U.S. citizen. They may possess a green card. They require an export license. They have guaranteed protection under the U.S. Asylum Program.

Review Question 3 Which of these are tangible export controlled items? Facility visit 22 CFR 121, USML Mail Trade shows

Review Question 4 What policy document lists “controlled” defense articles such as ordnance, projectiles, and aircraft? AQAP-2070 22 CFR 121, USML STANAG No. 4107 DFARS 246.406(1)(ii)