International Trade Law News

Published by Jacobson Burton Kelley PLLC

The Department of Defense (DoD) published in today's Federal Register the long-awaited regulation amending the Defense Federal Acquisition Regulation Supplement (DFARS) to address requirements for complying with export control laws and regulations when performing DoD contracts. This important change to the DFARS specifically recognizes contractor responsibilities to comply with existing Department of Commerce and Department of State export control regulations and requires contractors to flow-down export control requirements to subcontractors that have access to or generate export-controlled items.

The interim rule, which is effective today, adds two new clauses to be used when export-controlled items, including information or technology, are expected to be involved in the performance of a contract, or when there is a possibility that export-controlled items, including information or technology, may come to be involved during the period of performance of the contract.

The two new export control DFARS clauses read as follows:

252.204-7008 Requirements for contracts involving export-controlled items.

Requirements for Contracts Involving Export-Controlled Items (Jul 2008)

(a) Definition. Export-controlled items, as used in this clause, means items subject to the Export Administration Regulations (EAR) (15 CFR Parts 730-774) or the International Traffic in Arms Regulations (22 CFR Parts 120-130). The term includes: (1) Defense items, defined in the Arms Export Control Act, 22 U.S.C. 2778(j)(4)(A), as defense articles, defense services, and related technical data. The term "defense items'' includes information and technology.
(2) Items, defined in the EAR as "commodities, software, and technology,'' terms that are also defined in the EAR, 15 CFR 772.1. Regarding the release of items subject to the EAR to foreign nationals within the United States, "items'' only include technology and software source code (and not commodities) subject to the EAR.
(b) The parties anticipate that, in the performance of this contract, the Contractor will generate or need access to export-controlled items.
(c) The Contractor shall comply with all applicable laws and regulations regarding export-controlled items, including the requirement for contractors to register with the Department of State in accordance with the ITAR. The Contractor shall consult with the Department of State regarding any questions relating to the ITAR and with the Department of Commerce regarding any questions relating to the EAR.
(d) The Contractor's responsibility to comply with all applicable laws and regulations regarding export-controlled items exists independent of, and is not established or limited by, the information provided by this clause.
(e) Nothing in the terms of this contract is intended to change, supersede, or waive any of the requirements of applicable Federal
laws, Executive orders, and regulations, including but not limited to--
(1) The Export Administration Act of 1979, as amended (50 U.S.C.
App. 2401-2420);
(2) The Arms Export Control Act of 1976 (22 U.S.C. 2751 et seq.);
(3) The International Emergency Economic Powers Act (50 U.S.C. 1701-1707);
(4) The Export Administration Regulations (15 CFR Parts 730-774);
(5) The International Traffic in Arms Regulations (22 CFR Parts 120-130);
(6) Executive Order 13222, as extended;
(7) DoD Directive 2040.2, International Transfers of Technology,
Goods, Services, and Munitions; and
(8) DoD Industrial Security Regulation (DoD 5220.22-R).
(f) The Contractor shall include the substance of this clause, including this paragraph (f), in all subcontracts that are expected to involve access to or generation of export-controlled items.

252.204-7009 Requirements regarding potential access to export-controlled items.

Requirements Regarding Potential Access to Export-Controlled Items (Jul 2008)

(a) Definition. Export-controlled items, as used in this clause, means items subject to the Export Administration Regulations (EAR) (15 CFR Parts 730-774) or the International Traffic in Arms Regulations (22 CFR Parts 120-130). The term includes:
(1) Defense items, defined in the Arms Export Control Act, 22 U.S.C. 2778(j)(4)(A), as defense articles, defense services, and related technical data. The term "defense items'' includes information and technology.
(2) Items, defined in the EAR as "commodities, software, and technology,'' terms that are also defined in the EAR, 15 CFR 772.1. Regarding the release of items subject to the EAR to foreign nationals within the United States, "items'' only include technology and software source code (and not commodities) subject to the EAR.
(b) The parties do not anticipate that, in the performance of this contract, the Contractor will generate or need access to export-controlled items.
(c) If, during the performance of this contract, the Contractor becomes aware that the Contractor will generate or need access to export-controlled items--
(1) The Contractor shall notify the Contracting Officer in writing; and
(2) The Contracting Officer will expeditiously--
(i) Modify the contract to include the Defense Federal Acquisition Regulation Supplement clause 252.204-7008, Requirements for Contracts Involving Export-Controlled Items;
(ii) Negotiate a contract modification that eliminates the requirement for performance of work that would involve export-controlled items; or
(iii) Terminate the contract, in whole or in part, as may be appropriate, for the convenience of the Government, in accordance with the Termination clause of the contract.

Labels: DFARS, DoD, Export Controls