1. 01/09/08 PERU July 2009

2. 01/09/08 End-Use Monitoring Third Party Transfer of U.S.-Origin Defense Equipment

3. 01/09/08 Objectives  Review the programs under which the equipment was supplied.  Know the goals, requirements and responsibilities for End Use Monitoring.  Know the requirements for Third party Transfer of U.S. Origin Defense Equipment.  Introduce the SCIP EUM information

4. 01/09/08 Grave New Requests ZASTAVIA Disposal Sale End use change BANDARIA Cradle Third Party Transfer Third Party Transfer

5. 01/09/08  Arms Export Control Act AECA  Foreign Assistance Act FAA  National Defense Authorization Act 2008  Export Administration Act Laws  International Traffic in Arms Regulations (ITAR)/Munitions list  Security Assistance Management Manual  DoD M Demilitarization Manual  DoD M Arms, Ammunition and Explosives (AA&E)  Export Administration Regulation Regulations and Policies Laws and Regulations

6. 01/09/08 Basic U.S. Arms Transfer Programs  Military Assistance Program (1950-81)*  Military Assistance Program (MAP merger) (1981-90)*  FAA, Sec. 506 drawdown authority*  FAA grant EDA programs*  Foreign Military Sales (FMFP grant and loan)*  Foreign Military Sales (cash)**  Direct Commercial Sales (USML & CCL)*** *FAA 505 **LOA ***DSP 83

7. 01/09/08 Conditions of Eligibility – Grants (EDA, MAP, Drawdowns, MAP Merger, FMFP Grant)  No defense articles, services, or related training shall be furnished on a grant basis unless the country agrees to the following “use” provisions:  Limits use to government officers, employees, and agents  Does not permit unauthorized transfers  Does not permit use for purposes other than those for which furnished  Maintains required security  Furnishes observation and information  “Reversionary rights”, or returns equipment to the U.S. when no longer needed [§505, FAA]

8. 01/09/08 Non-Transfer, Security, Use Provisions-FMS  FMS (Including FMFP, MAP Merger) or DCS  Furnishing of defense articles / services must strengthen U.S. security & promote world peace.  No retransfers without Presidential consent  No use of articles / services for purposes other than for which furnished  Recipient to maintain security of such article  Requirements identified in LOA or Non-transfer & Use Certificate (DSP-83**)  Credit (repayable) items: proceeds to USG until loan paid off ** Does not include provisions for security

9. 01/09/08 EUM Goal  Preserve the technological advantages enjoyed by U.S. military forces over potential adversaries by impeding access to militarily significant items and technologies

10. 01/09/08 GOLDEN SENTRY Legal Basis For Program  Section 40A of the Arms Export Control Act (AECA) enacted in 1996 (Public Law 104-164)  The President shall establish a program that provides for End-Use Monitoring in order to improve accountability with respect to Defense articles sold, leased, or exported under the AECA or FAA.  Requires, to the extent practicable, monitoring of U.S. arms transfers by providing “reasonable assurance” that recipients comply with USG export control requirements regarding the use, transfer, and security of defense articles and services.

11. 01/09/08 EUM Controls  System of check and cross checks  Items ordered are authorized  Protection of articles or information  Release is properly cleared with USG  Delivery to designated government representative (DGR) Required inventories by PN and US

12. 01/09/08 USG End-Use Monitoring Programs  State Department  Blue Lantern  Defense Department  Golden Sentry  Commerce Department  Extrancheck

13. 01/09/08 Verification Compliance Accountability DoD EUM Program

14. 01/09/08 Golden Sentry Program  Designed to provide assurance that:  Recipient is complying with USG end- use, third country transfer, and security requirements, and  Provide for end-use verification of sensitive technologies vulnerable to diversion or misuse.

15. 01/09/08 EUM Levels of Monitoring  Routine EUM :  Conducted on defense articles/services transferred to a trusted partner  LOAs require no unique notes or conditions  Performed by SCO and host country  Enhanced EUM (EEUM):  Sensitive defense articles and/or services  LOAs may contain notes and/or special conditions  Contingent on Trust with Verification  May require compliance visit by DSCA team  Additional funding provided

16. 01/09/08 “Enhanced EUM” Defense Articles 1.Communication Security (COMSEC) Equipment 2.STINGER Missiles and Gripstocks 3.Night Vision Devices 4.JAVELIN Missiles and Command Launch Units 5.TOW-2B Missiles 6.AMRAAM (AIM-120) 7.AIM-9X Advanced Sidewinder Missiles 8.SLAM-ER 9.Harpoon Block II (JASSM) (JSOW under consideration)

17. 01/09/08 Enhanced EUM Defense Articles (Con’t) 10.Joint Munitions, e.g., Joint Air-to-Surface Standoff Missile 11.Unmanned Aircraft System (UAS) 12.Standard Missile-3 (SM-3) 13.Tomahawk Missile 14.Large Aircraft Infrared Countermeasures (LAIRCM) 15.Special Provisions pertaining to Physical Security and Accountability with the transfer documents

18. 01/09/08 Enhanced EUM Defense Articles (Con’t)  Section 505 of the FAA: Grant Assistance Equipment provided through EDA, Military Assistance Program (MAP), FMF, etc.  Country to provide inventory  Country to certify what happened to items provided that are no longer found.

19. 01/09/08 Verification Statement Effective 29 Nov 99, any agreement for the USG sale (FMS) or lease of USML items will include a statement that the USG retains the right to verify credible reports that such items have been used for purposes other than agreed upon.

20. 01/09/08 Mandatory LOA Note  “Pursuant to the FAA, Section 505,and the AECA, Section 40A, the USG will be permitted, at its discretion to conduct an inspection and physical inventory of all articles and services transferred under this LOA. Upon request, the inventory and accountability records maintained by the purchaser will be made available to the U.S. personnel conducted this inspection.”  “If an Enhanced EUM item is included in the FMS case, add the following sentence to the end of the note text above:”  “Enhanced EUM physical security and accountability requirements are annotated in note (insert LOA note number).”

21. 01/09/08 DSCA Responsibilities  Manage DoD EUM program  Policy and guidance  Coordinate all EUM notes and provisos on LOAs  Forward reports of possible violations to DoS  Publish reports of lessons learned  Manage DSCA visit program

22. 01/09/08 EUM Visits  Familiarization Visit and Regional Forum  Foreign country representatives, SCO, Unified Command and DSCA work together to mutually develop effective EUM compliance plans.  Prompted by a request or the introduction of new equipment  Determine requirement(s) for future Compliance Assessment Visit  Compliance Assessment Visit  Review and Assess SCO and host nation’s EUM compliance programs  This visit is always coordinated with the recipient country/ international organization.  Facility visits, inventories  EUM Investigation Visit  Investigate possible violations of AECA Section 3 or FAA Section 505  Prompted by information reports or other sources  Closely coordinated with the foreign government via the U.S. Embassy in country and/or State and Defense Departments  Directed by DoS

23. 01/09/08 MILDEP & IA Responsibilities  Identify sensitive technologies and defense articles to be candidates for EEUM  Include non-standard notes for articles and services that require physical security and accountability procedures **  Provide delivery records w/serial #s of all EEUM items to SCO and PN  Input item serial # into SCIP  Report possible violations to DSCA  Provide DSCA with quarterly report (Chap 8 SAMM)  Incorporate EUM into workforce training programs

24. 01/09/08 Geographic Combatant Commands (GCC) Responsibilities  Maintain a Golden Sentry POC  Assess effectiveness of EUM compliance  Ensure all EUM activities are reported.

25. 01/09/08 SCO Responsibilities  Designate a Golden Sentry POC  Conduct routine EUM and EEUM visits/inventories as required  Establish reporting procedures w/ PN for EEUM articles and information  Report to DSCA when required inventories are completed (via SCIP)  Provide DSCA projected dates of future compliance visits  Support Golden Sentry team visits and coordinate w/ PN

26. 01/09/08 SCO Conduct of EUM  Develop a combined EUM Compliance plan with PN  Review all LOAs with SAMM Table C5.T5 notes for EEUM requirements.  Keep records of visits/inventories and PN provided inventories  Keep records of the authorization of Third Party Transfers.  Keep records of reports of expended and consumed items provided by PN  Special budget requests for EEUM

27. 01/09/08 Partner Nation EUM Responsibilities  Demonstrate support for U.S:  principles,  laws,  regulations, policies and practices  By compliance with the requirements embodied in signed agreements for:  Security,  Third party transfer,  End-use

28. 01/09/08 Partner Nation EUM Responsibilities (Con’t)  Maintain good interface  Develop EUM plan with SCO  Maintain good internal accountability  Keep records of  Inventories  Items  Consumed  Expended  Damaged or destroyed  Transferred  Change of end Use

29. 01/09/08 Blue Lantern EUM Program  Department of State Program that focuses on monitoring Direct Commercial Sales (DCS) of defense articles by U.S. Industry to a foreign nation.  Initiated by DoS in 1990 for DCS  Systematic process aimed at enforcing the AECA and the ITAR  DoS approves the export license and primarily focuses on “pre-delivery” controls (licensing checks) and limited post delivery checks.  Country POCs are located in the Embassy and work for the Ambassador/Department of State.

30. 01/09/08 Reasons for Unfavorable Checks  One or more parties deemed unreliable recipient of USML based on Blue Lantern check, or other derogatory information about parties uncovered: 37%  End-user reported that that they did not order the items of the license – indicating possible intent on the part of the exporter or other parties to violate the ITAR and AECA: 19%  End-use different than that stated on the license: 18%  Parties not listed on the license involved in the transaction: 11%  One or more parties violated terms of an agreement or proviso on the license: 5%  Unable to contact/locate a party to license: 4%  Evidence of diversion or unauthorized re-export: 3%  Refusal to cooperate: 2%

31. 01/09/08 EXTRANCHECK EXTRANCHECK EUM Program  Department of Commerce Program that focuses on monitoring Dual-Use Items transfers by U.S. Industry to a foreign nation via the Export Administration Regulation (EAR).  DoC approves the export license and primarily focuses on “pre-delivery” controls (licensing checks) and conducts post delivery checks.  Post delivery checks are performed by Bureau of Industry and Security (BIS) Attaches, “Sentinel Teams” from DoC BIS and U.S. Foreign and Commercial Service Officers.

32. 01/09/08 What Are Third Party Transfers?

33. 01/09/08 THIRD-PARTY TRANSFERS The transfer, sale, disposal or change in end-use of any U.S.-Origin Defense Article, including all associated components, services, and training, acquired through any USG Security Assistance Program.

34. 01/09/08 All U.S.- Origin Defense Articles, Services, Training, or Data Require USG Authorization Before Transfer or Sale

35. 01/09/08 USG Authorization is also Required for Demonstrations, Exhibits, and Displays

36. 01/09/08 USG Authorization is also required for Demonstrations, Exhibits, and Displays

37. 01/09/08 Justifications  Internal Security  Legitimate Self-Defense  To Prevent the Proliferation of Weapons of Mass Destruction  Participation in Collective Arrangements Consistent with the UN Charter  Economic and Social Development Activities

38. 01/09/08 The USG will only consider a third-party transfer if the USG itself would transfer the Defense Articles, Services, Training, or Data to the proposed recipient Critical To USG Decision

39. 01/09/08 30-Day Formal Notification Period MDE $14 Million Threshold All Other Articles $50 Million Threshold 30-Day Formal Notification Period MDE $14 Million Threshold All Other Articles $50 Million Threshold Congressional Notification

40. 01/09/08 PM/RSAT Submitting Requests

41. 01/09/08 Requirements for Consideration  An Official Request from the Divesting Government  A Completed Standard Questionnaire  End-Use, Retransfer, and Security Assurances from the Recipient

42. 01/09/08 Official Request  Requests are only considered official when signed and forwarded by a Bona Fide Representative of the Divesting Government

43. 01/09/08 Official Requests Recipient Entities CANNOT submit Requests

44. 01/09/08 Using a Broker? Divesting Government Recipient

45. 01/09/08 Office of Defense Trade Controls Compliance (PM/DTCC) Directorate of Defense Trade Controls U.S. Department of State www.pmdtc.org Registration is for ALL BROKERS

46. 01/09/08 Standard Questionnaire  Consists of fifteen (15) questions  Required questions must be answered  Provide as much detail as possible about transfer http://www.state.gov/t/pm/rsat/c14031.htm

47. 01/09/08 Standard Questionnaire Important Questions  Type of Transfer  Description and Quantity  Method of Acquisition  Original Acquisition Value and Year  Contact Info for All Participating Parties

48. 01/09/08 Government-to-Government Private Entity Temporary Transfer Change in End-Use Disposal Types of Third Party Transfers

49. 01/09/08 Private Entities  Presumption of denial  Limited exceptions for entities with proof of government contract or static display

50. 01/09/08 Temporary Transfer  Coalition Operations  Refurbishment/Repair  Integration  Upgrades  Loans

51. 01/09/08 The use of any U.S.-Origin Defense Article, Service or Training for purposes other than for which it was acquired Change In End-Use

52. 01/09/08 Change In End-use  Training  Static Display  Demonstrations  Exhibits  Cannibalization (Grant items only)

53. 01/09/08 The destruction or scrapping of any U.S.-Origin Defense Article Disposal

54. 01/09/08 Disposal All components require demilitarization in accordance with USG standards before destruction All participating parties must be listed on request

55. 01/09/08 De-militarization Manual (DoD 4160.21-M-1)  Graphic and written de-mil procedures for types of end items  Different procedures based on intended end use  Deviation from procedures should be approved by USG  Detailed information from proponent military department.

56. 01/09/08 Description and Quantity  If known, provide NSN of each article  Provide total of each type of article separately  Provide as much detail as possible on condition of article

57. 01/09/08 Method of Acquisition  Foreign Military Sale (FMS)  Foreign Military Financing Program (FMFP)  Military Assistance Program (MAP)  Drawdown  Cooperative Development Program  Direct Commercial Sales (DCS)

58. 01/09/08 Net Proceeds  The return of all net proceeds from the sale, including scrap, of any U.S- origin component acquired through a MAP or grant EDA.

59. 01/09/08 Net Proceeds (Con’t) WAIVER  A waiver may be granted by the Under Secretary, if the justification warrants, for articles acquired through the Military Assistance Program before 1985

60. 01/09/08 Assurances  All recipients, including Private Entities, must Provide assurances  Assurances must be signed by a  Representative authorized to legally bind the Recipient Government  Assurances must also be provided by the  Government exercising legal jurisdiction over a foreign Private Entity Recipient  Average receipt time for assurances is 6 months

61. 01/09/08 The transfer, sale, disposal or change in end-use of any U.S.-origin component without USG authorization is a

62. 01/09/08 Providing access to any U.S.-origin component for Governments or Entities for intangible transfers without approval is also a

63. 01/09/08 Congressional Requirement U.S. law requires the Department of State to report possible Third-Party Transfer violations to Congress

64. 01/09/08 Violation Penalties  The President and Congress have legal authority to impose penalties  Law does not require imposition of specific penalty  Penalties may range from suspension to termination of FMS programs

65. 01/09/08 Send Your Request To: PM/DDTC, SA-1, 12th Floor Directorate of Defense Trade Controls Bureau of Political Military Affairs U.S. Department of State Washington, D.C. 20522-0112 (202) 663-1282 www.pmdtc.org

66. 01/09/08 The SCO Toolbox Security Cooperation Information Portal (SCIP)

67. 01/09/08 SCO Toolbox Community  Supports the DSCA EUM Program Office, Combatant Commands and SCO/ODC Offices worldwide To reach the SCO Toolbox Community, Click here

68. 01/09/08 EUM Home Page

69. 01/09/08 EUM Support

70. 01/09/08 End-Use Monitoring Third Party Transfer of U.S.-Origin Defense Equipment