TYPES OF INTERNATIONAL PROGRAMS
1. International programs that will involve the disclosure or export of defense articles and related technical data can occur through commercial exports or government programs. Most of these programs are governed by the AECA (reference b). Government-to-government sales, called Foreign Military Sales (FMS), are further governed by the SAMM (reference d). Exports of defense articles and related technical data by contractors require a license or other written export authorization pursuant to the ITAR (reference c), except for certain exemptions (see subsection B.3., below and Chapter 4). DoD Components are exempt from the licensing requirements. One of the situations in which commercial exports are exempt from the licensing requirements of the ITAR occurs if the export is in furtherance of a program between a U.S. Government agency and a foreign government (i.e., a government-to-government program). DoD Components must use caution when exercising this exemption status to ensure that they do not aid a contractor in circumventing the ITAR licensing requirements for commercial exports that are not in support of a government-to-government program. "Exports" by DoD Components must comply with agency directives and regulations that implement the AECA, just as the ITAR implements the AECA for commercial exports.
2. The NSDM 119 (reference t), which is implemented by NDP-1 (reference s), is the basic policy that governs decisions on the foreign disclosure of classified articles and information related to both commercial and government international programs.
3. The decision on whether a foreign purchaser should acquire defense articles through a government-to-government program or direct commercial sale usually is governed by the particular circumstances and is made by the purchaser. Exceptions to this principle are items that are sold only through FMS because of security reasons, Presidential restriction, international agreement, a U.S. interoperability or safety requirement, or a strong U.S. preference for FMS when the purchaser is using U.S. provided credit funds. The Defense Security Assistance Agency (DSAA) pamphlet, "A Comparison of Direct Commercial Sales & Foreign Military Sales for the Acquisition of U.S. Defense Articles and Services" (reference x) presents a thorough discussion of the pros and cons of each method.
B. COMMERCIAL EXPORTS OF DEFENSE ARTICLES AND TECHNICAL DATA
1. Defense Articles
a. Unclassified Defense Articles
(1) Part 123 of the ITAR governs the export of unclassified defense articles. It requires a person who intends to export a defense article to obtain a license from the ODTC prior to the export, unless the export qualifies for an exemption. A copy of a purchase order or letter of intent from the purchaser or other appropriate documentation must accompany the application for a license to permanently export defense articles. The application (Form DSP-5) becomes the license for permanent export when approved by the ODTC.
(2) Temporary exports of defense articles which will return to the United States within a specified period of time, with no transfer of title, require an application and prior approval on Form DSP-73. This form, when approved by ODTC, becomes the license for the temporary export.
b. Classified Defense Articles. Part 125 of the ITAR governs the export of classified defense articles. Only U.S. nationals and foreign governmental entities in the United States, e.g., an embassy, may submit applications to ODTC for the permanent or temporary export or temporary import of classified defense articles, using Form DSP-85. It, like Forms DSP-5 and DSP-73, becomes the license when approved by the ODTC. A Form DSP-83, Non- transfer and Use Certificate (see Chapter 6) must accompany the application.
2. Technical Data
a. Persons planning to export classified or unclassified technical data must obtain a license from the Department of State prior to the transaction unless the ITAR provides an exemption from licensing. This requirement applies whether the export or disclosure to foreign nationals is in connection with visits by U.S. persons to foreign countries, visits by foreign persons to the United States, or otherwise. The disclosure of technical data during visits by U.S. persons to diplomatic missions and consular offices also requires a license. The method of transmission (e.g., in person, by telephone, correspondence, electronic means, telex, etc.) has no bearing. The export occurs in "...disclosing or transferring technical data to a foreign person, whether in the United States or abroad."
b. The export of technical data to support the filing and processing of patent applications in foreign countries is subject to regulations issued by the U.S. Patent and Trademark Office under 35 U.S.C. 184 (reference y). The export of technical data which exceeds that used to support a domestic filing of a patent application, or to support a foreign filing of an application when no domestic application has been filed, or which has had a secrecy order placed on it by the patent office, requires a license issued by the Department of State.
(1) Unclassified Technical Data. A Form DSP-5 is the application/license for the disclosure of unclassified technical data, except when the disclosure is to support foreign production, which requires a Manufacturing License Agreement (MLA), or defense services, which require a Technical Assistance Agreement (TAA). The licensing procedures in Part 124 of the ITAR apply to MLAs and TAAs.
(2) Classified Technical Data.
(a) All applications for the export of classified technical data are to be submitted to the ODTC on Form DSP-85 or through an MLA or TAA. Only U.S. persons may submit an application or agreement. A completed DSP-83 must accompany the application. The transmission to ODTC of classified information accompanying the application must be in accordance with the National Industrial Security Program Operating Manual (NISPOM) (reference z).
(b) Once the ODTC has approved the export of classified technical data, the transfer also must be in accordance with the security requirements of the 5220.22-M/NISPOM. See also Subsection B.5., below, and Chapter 6 of this handbook for more details concerning contractor responsibilities and the functions performed by the Defense Investigative Service (DIS).
(c) Part 125 of the ITAR does not cover the export of data relating to naval nuclear propulsion plants, their land prototypes, special facilities for their construction support and maintenance (USML Category VI (e)) and nuclear weapons design and test equipment (USML Category XVI). These are governed by the Department of Energy and the Nuclear Regulatory Commission under the Atomic Energy Act of 1954 (reference g), as amended and the Nuclear Non-Proliferation Act of 1978 (reference aa).
3. Information Requirements to Support Export Applications. In order to expedite and comply with the export licensing decision process, contractors should include the following types of information with their applications. Items not listed below, but which should also be considered, include requisite ITAR certifications and statements, if applicable, and the Form DSP-83, Non-transfer and Use Certificate. The prescribed number of copies must be provided with the application.
A description of the U.S. or foreign government requirement which justifies the proposed export;
A description of the type and classification level of any classified information and other export controlled technical information which ultimately would have to be exported and the name, address and telephone number of the government entity that originated any of that classified information;
The identification of any prior licenses for the same articles or data to the intended recipient and other countries;
A discussion on how U.S. operational and technology interests can be protected (e.g., can certain information be withheld);
An evaluation of foreign availability of similar articles or technology;
The identity, including name, address, and telephone number of U.S. and foreign government officials (including U.S. in-country officials) who are knowledgeable concerning the government requirement.
The contractor's opinion on benefits to accrue to the United States from the proposed export.
b. To facilitate the transfer upon approval of the application, provide in or with the request:
The federal supplier code (FSC) or commercial and government entity code (CAGE) for each listed U.S. entity;
The identities of the entities listed on the application that will have title and/or custody to the article or data during transfer;
Proposed transfer arrangements and transportation plan, if required;
Any security arrangements proposed by the contractor or foreign recipient that may require U.S. and/or foreign government approval (e.g., hand carriage); and
The identification with address and telephone number of the Cognizant Security Office (CSO) for all listed U.S. contractors.
c. Contractors may, concurrent with submission of the request for export authorization, furnish the controlling DoD Component with a copy of the request, including all attachments and supplements, to expedite the review process. The controlling DoD Component is identified in the pertinent DD Form 254, Contract Security Specification, that is required for all DoD contracts involving classified information.
4. ITAR Exemptions
a. Technical Data Exemption. The ITAR, Parts 123, 125 and 126, provide for exemptions to the licensing requirements for the export of classified and unclassified technical data. The exemptions are not applicable to proscribed countries listed in Part 126.1 of the ITAR. The transmission of classified information under an exemption must be in compliance with the NISPOM. The exporter also must certify to the transmittal authority (normally DIS or a DPRO) that the technical data to be exported does not exceed the technical limits of the applicable export authorization. The following exemptions are available for the export of technical data:
(1) Technical data, including classified information, pursuant to an official written request or directive from the Department of Defense. The disclosure authorization to exercise this exemption must be in writing, by a Principal or Designated Disclosure Authority of the DoD Component that has classification jurisdiction over the information. The DoD component is identified in the pertinent DD Form 254 as mentioned in subsection 3, above.
(2) Technical data, including classified information, in furtherance of a manufacturing license or technical assistance agreement approved by the Department of State consistent with the requirements of Section 124.3 of the ITAR.
(3) Technical data, including classified information, in furtherance of a contract between the exporter and an agency of the U.S. Government, if the contract provides for the export of relevant technical data and such data does not disclose the details or design, development, production or manufacture of any defense article.
(4) Copies of technical data, including classified information, previously authorized for export to the same recipient. Revised copies of such technical data are also exempt if they pertain to the identical defense article, and if the revisions are solely editorial and do not add to the content of technology previously exported or authorized for export to the same recipient.
(5) Technical data, including classified information, being returned to the original source of import.
(6) Technical data directly related to classified information previously exported or authorized for export to the same recipient, and which does not provide the details of design, development, production, or manufacture of any defense article.
(7) Technical data, including classified information, to be sent by a U.S. corporation to a U.S. person employed by that corporation overseas, or to a DoD Component. The data must be solely for U.S. use, not for support of a proposal or for foreign production or technical assistance. The recipient U.S. person overseas must be either an employee of the U.S. Government or a direct employee of the U.S. corporation and not an employee of a foreign subsidiary or division of the corporation. Classified data must be transferred through official government channels as described in Chapter 6 of this handbook.
(8) Technical data, including classified information, for which the ODTC has granted an exemption in writing to the exporter pursuant to an agreement with the Department of Defense or NASA which requires such exports. ODTC will normally grant this exemption only if the arrangement directly implements an international agreement to which the United States is a party and fulfillment of the agreement requires multiple exports.
(9) Technical data in the form of basic operations, maintenance and training information relating to a defense article lawfully exported or authorized for export to the same recipient. This exemption only applies to exports by the original exporter.
(10) Technical data related to firearms not in excess of caliber .50 and ammunition for such weapons, except detailed design, development, ammunition for such weapons, except detailed design, development, production or manufacturing information;
(11) Disclosures of unclassified technical data in the United States by a U.S. institution of higher learning to foreign persons who are their bona fide and full-time regular employees. This exemption is available only if:
(a) The employee's permanent abode throughout the period of employment is the United States;
(b) The employee is not a national of a country to which exports are prohibited in accordance with Part 126.1; and
(c) The institution informs the individual in writing that the technical data may not be transferred to other foreign persons without prior written permission from ODTC.
(12) Technical data approved for public release (i.e., unlimited distribution) by the cognizant U.S. Government department or agency.
b. Plant Visits Exemption
(1) Oral and visual disclosures of unclassified technical information during a classified plant visit by a foreign person are exempt from licensing requirements pursuant to Part 125.5 of the ITAR, provided:
(a) The classified visit is authorized by a license issued by ODTC; or
(b) The classified visit was approved in connection with an actual or potential government-to-government program by a DoD Component having classification jurisdiction over the classified article or data; and
(c) The unclassified information is directly related to the classified article or data previously approved and does not disclose the details of the design, development, production or manufacture of any other defense article. For U.S. Government approved visits, the requirements of the NISPOM must be met.
(2) The documentary disclosure of unclassified information during the course of a classified or unclassified plant visit by a foreign person approved by ODTC or a DoD Component is exempt from licensing requirements provided the documents do not disclose technical data in excess of that authorized for oral and visual disclosure. The document must not contain technical data which could be used for the design, development, production or manufacture of a defense article unless the exemption described in subparagraph 4.(a)(2), above, applies.
(3) The oral and visual disclosure of classified information to a foreign person during a plant visit approved by the appropriate DoD component is exempt from licensing requirements if:
(a) The visit complies with the requirements of the NISPOM (see also Chapter 7 of this handbook);
(b) The classified information relates directly to and is within the scope of the disclosure approved by the DoD Component;
(c) The disclosure does not disclose the details of the design, development, production or manufacture of any other defense article.
c. Government Agencies Exemption. The temporary export of any classified or unclassified defense article or technical data by or for any agency of the U.S. Government is exempt from the licensing requirements, if the export is:
(1) For official use by such agency, or
(2) For carrying out any foreign assistance, cooperative project or sales program authorized by law and subject to the control of the President by other means. This exemption only applies when all aspects of the transaction (export, carriage, and delivery abroad) are effected by a DoD Component, or when the export is covered by a U.S. Government Bill of Lading. This exemption does not apply when a DoD Component acts as a transmittal agent on behalf of a private individual or firm, either as a convenience or in satisfaction of security requirements. The approval of ODTC must be obtained before defense articles exported pursuant to this exemption are permanently transferred to a foreign person (e.g., property disposal of surplus defense articles overseas) unless:
(a) The transfer is pursuant to a grant sale, lease, loan, or cooperative project under the AECA or a sale, lease or loan under the Foreign Assistance Act of 1961 (FAA), as amended (reference bb), or
(b) The defense articles have been rendered useless for military purposes beyond the possibility of restoration. Part 126.4 of the ITAR should be consulted for details.
DoD Components must use caution to ensure that this exemption is not used to circumvent the licensing requirements of the ITAR. See also subparagraph d., below.
d. Foreign Military Sales Exemption. Exports of defense articles and services and related technical data pursuant to an executed DoD Letter of Offer and Acceptance (LOA) are permitted without a license if the export is accompanied by a properly executed Form DSP-94 for unclassified exports, or the approved LOA for classified exports. The export must be made by the cognizant diplomatic mission or properly cleared and designated freight forwarder that is registered by the Department of State. If the export involves classified articles or data there must be an approved transportation plan and the security arrangements must be in compliance with the NISPOM.
e. Canadian Exemption. Section 126.5 of the ITAR permits exports to Canada of any unclassified defense article or unclassified technical data without a license if the article or data is for end-use in Canada by Canadian citizens or return to the United States, with the following exceptions:
(1) Fully automatic firearms in USML Category I(a) not for end-use by the Federal Government, or a Provincial or Municipal Government of Canada;
(2) Nuclear weapons strategic delivery systems and all components, parts, accessories, attachments specifically designed for such systems and associated equipment;
(3) Nuclear weapon design and test equipment listed in USML Category XVI;
(4) Naval nuclear propulsion equipment listed in USML Category VI(e);
(5) Aircraft listed in USML Category VIII(a);
(6) Submersible and oceanographic vessels and related articles listed in USML Category XX(a) through (d).
(7) Technical data for use by a foreign national other than a Canadian.
(8) Unclassified technical data directly related to a classified defense article.
The foregoing does not exempt the exporter from complying with the AECA thirty days Congressional notification period, or from filing a shipper's export declaration required by Section 123.22 of the ITAR. The Congressional notification requirement must be satisfied prior to issuance of the license. This exemption may not be used for the manufacture in Canada of defense articles or for providing defense services. These require authorization under the provisions of a Manufacturing License or Technical Assistance Agreement or offshore procurement pursuant to Part 124 of the ITAR. The U.S./Canada Joint Certification Program is discussed in Chapter 4, subsection B.8.
5. Defense Investigative Service Responsibilities. ODTC will forward the original of the approved license or agreement for the export of classified articles and technical data to the Defense Investigative Service (DIS), with a copy to the exporter. After verifying the articles and data to be exported against the export authorization, and ensuring that all security requirements are satisfied (see Chapter 6 of this handbook), DIS or a designated government representative appointed by DIS, will authorize transfer. DIS will return the endorsed license to ODTC upon completion of the export or expiration of the license or agreement, which ever occurs first.
6. Commercial and Dual-Use Items. The Department of Commerce has jurisdiction over commercial and dual-use exports. Dual-use technology and hardware are considered to have possible military applications. The Commerce Department regulates exports to implement national security controls, US foreign policy and controls commodities that may be in short supply. The Export Administration Regulations contain a listing of all commodities which are controlled. This list is known as the Commerce Control List (CCL). Also, the Commerce Department has separated foreign countries into "Country Groups." This listing is also included in the EAR. An exporter needs to know both the Country Group designation and the CCL number prior to exporting. The Bureau of Export Administration (BXA) is the office that administers all Department of Commerce General type (G-DEST, GIT, GLR, GIFT, GTDA, GTDR, GTDU, etc.) licenses and Individual Validated Licenses (IVL). It also administers Distribution Licenses, Project Licenses and Short Supply Licenses.
C. GOVERNMENT PROGRAMS
1. Security Assistance And The Security Assistance Management Manual (SAMM). Security assistance transactions are administered and managed by the Department of Defense. The security assistance program is comprised of a group of programs authorized by the Foreign Assistance Act (FAA), and the AECA, and other related statutes. Under these authorities the United States provides defense articles, military training, and other defense related services, by grant, credit, cash sales, loans or leases in furtherance of national policies and objectives. The SAMM provides detailed guidance concerning these programs. Security assistance programs must follow the same DoD policies concerning the disclosure of CMI and CUI as other international programs.
a. Foreign Military Sales. One of the largest security assistance programs is the FMS program. It is a program through which eligible foreign governments and international organizations purchase defense articles and services from the U.S. Government. Examples of these transactions are sales of military equipment, supporting publications, training, technical data packages and engineering services. A Letter of Offer and Acceptance (LOA) is the usual documentation for establishing and carrying out an FMS transaction. An LOA is generally considered a form of contract, not an international agreement within the meaning of DoD Directive 5530.3 (reference cc). Therefore, LOAs are specifically exempt from the requirements of DoD Directive 5530.3. In addition to the security and technology provisions in Section Two (Standard Terms and Conditions) of the LOA, the SAMM (part 70105.L.3) provides for additional security provisions in an annex.
(1) The transfer of defense articles and services also may include the release by the government of defense related technical data of U.S. origin to a foreign recipient. The most prominent vehicle for transferring technical data is a Technical Data Package (TDP). The TDP normally includes technical design and manufacturing information sufficient to enable the construction or manufacture of a defense item or component, or its modification, or to enable the performance of certain operation and maintenance or production processes.
(2) There basically are three reasons to provide technical data to foreign governments. The first is to ensure the continued maintenance of U.S. origin equipment by the foreign recipient. The second is for evaluation or study by a foreign government considering a request to the United States for a coproduction or licensed production project. The third is for use in production of the item or components, or follow-on development, or improvement of an item of U.S. equipment. Coproduction is described in subparagraph C.1.d., below.
(3) The SAMM requires that the LOA clearly state that the purpose of the TDP is for one of the following:
(a) "This TDP is for operation and maintenance only; no production is authorized.
(b) "This TDP is for study purposes only - no production is authorized."
(c) "This TDP is for production purposes."
b. Leases. The U.S. Government may lease defense articles to a foreign government or international organization under the authority of Chapter 6, Sections 61 through 64 of the AECA, when there are compelling foreign policy and national security reasons to do so. Leases require the prior approval of the Director, DSAA. Typical cases are the leasing of an article for testing purposes to assist a government in making a decision whether to procure the article from the United States and the leasing of military equipment (e.g., ships, aircraft and vehicles) for operational use. The leasee pays rent and promises to restore the article to its original condition in accordance with the terms of the lease. A standard lease agreement in the SAMM is the vehicle for carrying out this program. The provisions of DoD Directive 5230.11 (reference dd), also apply.
c. Loans And Grants.
(1) FAA Loans Of Defense Articles. Section 503 of the FAA authorizes the loan of defense articles (materials, supplies and equipment) to foreign governments and international organizations with prior DSAA approval. The cost of the loan is charged to military assistance appropriations.
(2) AECA Loans of Defense Articles Section 65 of the AECA and Deputy Secretary Of Defense memorandum, "Delegation of Authority to the Military Departments and Directors of Defense Agencies," of November 27, 1990 (reference ee) provide the authority to loan materials, supplies and equipment to and accept loans or gifts of defense materials, supplies or equipment from NATO and major non-NATO allies for cooperative R&D purposes. An international agreement within the meaning of DoD Directive 5530.3 is required. These are not Security Assistance programs.
(3) Monetary Grants And Loans. Sections 23, 24 and 31 of the AECA authorize the Foreign Military Financing Program (FMFP) which consists of grants or loans, using Congressionally appropriated funds that enable eligible foreign governments to purchase U.S. defense articles, services and training through either FMS or direct commercial sales. There is no repayment required for a grant. The SAMM provides a sample loan agreement. DoD Directive 5230.11 also applies to grants and loans of small quantities of classified items for test and evaluation.
d. Coproduction/Licensed Production. Coproduction is an important component of DoD international programs. Allies are showing more interest in producing and assembling all or part of U.S. developed weapons systems, thereby improving their industrial skills and providing jobs for their citizens. Under coproduction, the U.S. Government enables a foreign government, international organization, or designated commercial producer to acquire the technical data and know-how to manufacture or assemble an item of U.S. defense equipment. Coproduction may be implemented through any one, or a combination of, international agreements, FMS arrangements, and direct commercial agreements. A coproduction agreement is subject to the provisions of DoD Directive 5530.3 and the security requirements of DoD Directives 5230.11 and 5230.20 (reference ff). Licensed production provides a similar vehicle for the transfer of technical data and know-how, but it is based on agreements by U.S. commercial firms with international organizations, foreign governments, or foreign commercial firms.
e. International Military Education And Training (IMET) Program. The IMET program is the means by which the Department of Defense provides grant training to military and defense establishment persons from eligible foreign countries and international organizations. The training includes both formal and informal instruction in the United States and overseas or by correspondence courses, publications and media of all kinds, training aids, orientation, training exercises, and military advice to foreign military units and forces. An LOA is the usual vehicle for providing such training to a foreign country.
2. Cooperative Research And Development (R&D). The United States participates in a wide variety of cooperative research and development programs, including exchange programs involving scientific and technical information, with allies and other friendly governments and with international organizations. The following is a brief description of the types of programs that fall under the category of cooperative R&D.
a. Data and Information Exchange Programs.
(1) In these programs the DoD exchanges certain technical data with other countries in order to identify cooperative opportunities to avoid wasteful or duplicative research and development. Examples of data and information exchange programs are the Defense Data Exchange Program (DDEP), various NATO R&D programs, The Technical Cooperation Program (TTCP) and the American-British-Canadian-Australian Forum (ABCA). Both of the latter two programs involve the United States, Canada, Australia, the United Kingdom and New Zealand. These programs normally involve the sharing of defense related basic scientific and technical information or technology base development information. Data and information exchange programs require an international agreement as prescribed in DoD Directive 5530.3.
(2) The generally accepted definition of basic scientific and technical information is information relating to fundamental theories, designs, and data for purely theoretical or experimental investigation into possible military application. It does not include manufacturing knowledge or design and production information or information on system capabilities and vulnerabilities of operational or developmental systems.
(3) The generally accepted definition of technology base development is information encompassing basic research, exploratory development and demonstrations of advanced technology development. These are DoD R&D budget appropriations categories 6.1, 6.2 and 6.3A, respectively. Included is the exploration of alternatives and concepts prior to development of specific weapons systems. Also included are feasibility demonstrations and test and evaluation of new concepts, technologies or equipment, and alternative solutions and research on generic systems.
(4) Agreements on data or information exchange programs are not to be used to avoid foreign disclosure and other requirements related to programs governed by other laws and policies, such as foreign sales, the loan or lease of equipment, and cooperative development. However, the information and data exchange programs often lead to the establishment of other programs, such as a cooperative development project. See Chapter 5 of this handbook for further discussion of programs under international agreements.
b. The Engineer and Scientist Exchange Program. The objective of the Engineer and Scientist Exchange Program (ESEP) is to promote international cooperation in military research, development, test and evaluation (RDT&E) through the exchange of defense establishment engineers and scientists. It provides for on-site working assignments for DoD military and civilian engineering and scientific (E&S) persons in allied and friendly countries and the reciprocal assignment of foreign E&S persons to U.S. defense establishments. These assignments are in areas of technical interest related to conventional weapon systems and equipment. See also Chapter 7.
c. Cooperative Research and Development Programs
(1) The Department of Defense is authorized to conduct cooperative research and development programs with allies and other friendly countries under both Title 10 (Armed Forces) and Title 22 (Foreign Relations and Intercourse) of the U.S.C. The objectives of these programs are to enhance U.S. and allied security; strengthen political, military and economic alliances; promote harmonization of mutual requirements; and lay the foundation for future cooperation.
(2) Before beginning a cooperative development program, DoD Components must consider the potential benefits and liabilities of cooperation. These considerations include, but are not limited to, system and/or technology performance, disclosure implications, technology transfer and/or acquisition, rationalization, standardization and interoperability (RSI); sales rights and restrictions; source selection and contracting; and impact on the U.S. defense industrial base. Chapter 8 discusses and describes the documentation required to analyze these issues.
d. The Foreign Comparative Testing (FCT) Program. The FCT Program is a test and evaluation program that encourages the DoD Components to fully evaluate allied and friendly foreign nations' systems, weapons or technology as a procurement option to satisfy a valid requirement. The 1990 DoD Authorization Act (reference hh) established this program. It consolidates the 1970s individual Military Component programs for testing foreign weapons, the Foreign Weapons Evaluation (FWE) program of the 1980s and the NATO Comparative Testing (NCT) Program. Classified and other sensitive U.S. test data shall be provided to the foreign governments or manufacturers in accordance with Chapters 3 and 4 of this handbook.
e. Foreign Test Of U.S. Equipment. Foreign countries may ask to test U.S. equipment prior to making their decision whether to buy U.S. equipment or produce their own. The tests must be under the control of the United States unless the head of the responsible DoD Component, in coordination with the Office of the Under Secretary of Defense for Acquisition and Technology (OUSD(AT)), approves an exception to policy. DoD Directive 5230.11 is the applicable directive.
D. PROGRAMS WITH NATO
1. The United States is a member of the North Atlantic Treaty Organization (NATO). This membership poses unique security and disclosure challenges. Generally, classified information released to the organization is available to all members at the discretion of the holder of the information. Therefore, prior to authorizing the disclosure of CMI to NATO, this factor must be taken into consideration.
2. The Department of Defense is involved with numerous NATO organizational elements. The Conference of National Armaments Directors (CNAD) is the primary organization for defense related research and development. The CNAD mission is to monitor, coordinate and support the development and implementation of alliance armaments programs. Its subordinate bodies are divided into "main groups" and "cadre groups" and their subordinate bodies. The main groups provide forums for the discussion and exchange of information and guidance for cooperative R&D programs. They are the principle action bodies to initiate cooperative efforts. Cadre groups work on the broad material acquisition issues affecting cooperative programs rather than focusing on a specific program.
a. The main groups include the NATO Army Armaments Group (NAAG), the NATO Navy Armaments Group (NNAG), the NATO Air Force Armaments Group (NAFAG), the Defense Research Group (DRG), the Tri-Service Group on Communications and Electronic Equipment (TSGCEE), the NATO Industrial Advisory Group (NIAG) and the NATO Group on Acquisition Practices.
b. The cadre groups include the Group of National Directors on Codification, the Group of National Directors for Quality Assurance, the Group on Rationalization of Design Principles and Test and Safety Criteria for Explosive Materials and Explosive Stores, and others.
c. In addition, there are other NATO organizations and subsidiary bodies in which the DoD participates. NATO Production and Logistic Organizations (NPLOs) are subsidiary organizations of NATO responsible for the implementation of tasks for which the North Atlantic Council has granted clearly defined organizational, administrative and financial independence to meet the requirements of the members in the fields of production and logistics, usually related to weapons or weapons systems procurement. NATO Management Offices or Agencies are responsible for the administration of NPLO projects. For example, one such organization, the NATO Maintenance and Supply Organization (NAMSO) is chartered to provide logistic support services for weapon and equipment systems held in common by NATO members. The day-to-day execution of these functions is carried out by the NATO Maintenance and Supply Agency (NAMSA). DoD also participates in the NATO infrastructure program, where individual NATO nations act as NATO's agent to manage commonly funded NATO infrastructure projects, such as airfields.
d. The DoD Components' foreign disclosure authorities are responsible for prior review of disclosures to international organizations and their component staffs and organizations. In order to limit access within an organization, disclosures may be contingent upon a prior arrangement with the organization to restrict access to specified components or persons.
E. RECIPROCAL PROCUREMENT ARRANGEMENTS
1. To promote standardization of defense equipment within NATO, the Congress enacted the Culver-Nunn Amendment to the FY 1977 Defense Authorization Act (P.L. No. 94-361) (reference hh). Culver-Nunn authorizes the Secretary of Defense to waive the Buy American Act of 1933 (41 U.S.C. 10a) (reference ii) when it is determined that it is inconsistent with the public interest to apply the restrictions of the Buy American Act to DoD's acquisitions for public use of certain supplies mined, produced or manufactured in certain foreign countries. With the impetus of Culver-Nunn, the Department of Defense negotiated and signed reciprocal procurement memoranda of understanding (MOUs) with the NATO nations. The Department of Defense negotiated similar agreements with additional nations over the years (see subparagraph (5), below).
2. A reciprocal procurement MOU is a bilateral agreement between the Department of Defense and the Ministry of Defense of an allied or friendly nation. It is designed to give the contractors of the signatory countries the opportunity to participate, on a competitive basis, in defense procurements of the other country.
3. Under the MOUs, the United States also waives the provisions of the Buy American Act of 1933 and the Balance of Payments Program (reference jj). Similarly, the allies must waive their "buy national" restrictions. This means that the industries of the signatory nations have an equal opportunity to bid on announced procurements.
4. Not all restrictions are waived by the MOUs. The Department of Defense, for instance, restricts to United States and Canadian sources procurements of any items determined to be vital in case of national mobilization or emergency. In addition, it restricts to U.S. sources procurements that include certain classified information or sensitive technology, procurements set aside for small businesses, and any other items restricted by law or regulation. The other signatories restrict similar items although, in some cases, their restrictions are not as well defined. The announcement of planned U.S. procurements is normally made in the Commerce Business Daily (CBD) by the contracting authority. The announcement must list any restrictions pertaining to a particular procurement. Program and foreign disclosure/security personnel should review the applicable Program Protection Plan, Technology Assessment/Control Plan and Cooperative Opportunities Document (see Section F, below, and Chapter 8) to determine whether restrictions on foreign participation for security reasons or technology control are appropriate prior to forwarding the request for proposal (RFP) package to the contracting officer for publication of the announcement.
5. The DoD currently has reciprocal procurement MOUs or similar agreements with 21 countries:
Australia Austria Belgium Canada
Denmark Egypt Finland France
Greece Germany Israel Italy
Luxembourg Netherlands Norway Portugal
Spain Sweden Switzerland Turkey
6. DoD Directive 5000.1 (reference kk), DoD Instruction 5000.2 (reference ll), and DoD 5000.2-M (reference mm) should be consulted for details on the DoD acquisition system.
F. PLANNING FOR INTERNATIONAL PROGRAMS
Reductions in the defense budgets of the United States and the NATO nations, and in other allied and friendly nations, coupled with the high cost of weapons systems has resulted in more international cooperation in the development of weapons systems. This trend is expected to continue. Therefore, planning must start at the beginning of system acquisition programs to consider if foreign participation can be permitted without jeopardizing U.S. military capabilities and the defense technology base. Foreign participation includes cooperative development as well as subsequent coproduction and sales. DoD Instruction 5000.2 requires that this planning commence prior to the Defense Acquisition Process Milestone I. It should commence at concept definition. Among the several documentary requirements related to the acquisition process, the following documents, which are discussed in more detail in Chapter 8, form the basis for determining both foreign involvement in the program and necessary security arrangements. The documents are mutually supporting and therefore should be prepared using a team approach.
*Technology Assessment/Control Plan. The original purpose of the Technology Assessment/Control Plan (TA/CP) was to provide a standard process to be used by program managers in describing the scope of their program and developing foreign disclosure, security, and negotiating guidelines for agreements on cooperative programs. DoD Directive 5530.3 requires a TA/CP as part of the package that requests authority to negotiate an international agreement. The Deputy Secretary of Defense expanded the purpose to include its use to expedite decisions on government and commercial sales of military systems and other foreign involvement in U.S. defense acquisition programs. The TA/CP is required at Milestone I of the acquisition cycle, and must be updated, if necessary, at each subsequent milestone.
* Program Protection Plan. The Program Protection Plan (PPP) also is required by DoD Instruction 5000.2 at Milestone I and all subsequent milestones. Its purpose is to describe measures to protect defense items and technical data from hostile collection efforts and unauthorized disclosure or compromise during the life cycle of the system. It addresses the protection of the essential program information, technologies and systems (EPITS), rather than trying to protect everything. It attempts to counter only recognized vulnerabilities using selected countermeasures from the seven security disciplines listed in DoD Instruction 5000.2.
3 Cooperative Opportunities Document. The possibilities of allied participation in a defense system acquisition program are documented in the Cooperative Opportunities Document (COD). Title 10, U.S.C. 2350a (reference gg) requires the Department of Defense to perform a thorough analysis of opportunities to conduct cooperative research, development or production with allied countries in major acquisition programs. DoD Instruction 5000.2 broadens the analysis to include other forms of international activities such as FMS, component or subcomponent codevelopment, or incorporation of subsystems from allied sources. It requires the same analysis for non-major acquisition programs. The DoD Component Acquisition Executive approves and forwards the COD to the Milestone Decision Authority at Milestone I, with updates as appropriate at subsequent Milestones.