Presentation on theme: "Do’s and Don’ts of Drafting TAAs and MLAs Presented to National Contract Management Association Cape Canaveral Chapter by Gary Stanley, Global Legal Services,"— Presentation transcript:
What is an Agreement? In State Department export control terms (ITAR 124.1), an agreement approved by the Office of Defense Trade Controls License (DTCL) allows a U.S. person to provide a defense service, technical assistance, or manufacturing know-how to a foreign person. Technical data and other defense articles such as hardware may be covered in the scope of an agreement as well. The assistance and know-how is what distinguishes an “Agreement” from other forms of authorizations that DTCL issues.
Activities Frequently Requiring Agreements Products to Foreign Parties Supporting Sales to Foreign Parties Providing Overseas Maintenance or Training Support Technical Studies or Evaluations with Foreign Parties Release of Manufacturing Data or Rights Efforts to Import Technology from Abroad Supporting a Foreign Military Sales Case (ITAR 126.6) Supporting U.S. Government-Sponsored Foreign Contracts (ITAR 126.4)
TAA versus MLA A TAA is an agreement for the performance of a defense service(s) or the disclosure of technical data, as opposed to an agreement granting a right or license to manufacture defense articles. Assembly of defense articles may be included, but providing production rights or manufacturing know-how are not conveyed. Should such rights be transferred, a MLA would be required.
TAA versus MLA An agreement whereby a U.S. person grants a foreign person an authorization to manufacture defense articles and which involves or contemplates: The export of technical data or defense articles or the performance of a defense service; or The use by the foreign person of technical data or defense articles previously exported by the U.S. person. A MLA involves the licensing of a manufactured defense article abroad, which requires the U.S. party providing manufacturing know-how to the foreign party (i.e., teaches the foreign party how to manufacture the item). A MLA can also involve just the assembly of hardware abroad and no actual manufacturing, if the foreign party requires manufacturing data to complete the assembly.
Department of State Arms Transfer Policy Decision Making PM/RSAT PM/DDTC Secretary of State Deputy Secretary of State Under Secretary of State For Arms Control and International Security A/S Political-Military Affairs Congress National Security Council OMB Policy Planning Regional Bureaus Functional Bureaus Legislative Affairs Private Industry Justice NASA Energy Commerce Legal Human Rights Non Proliferation DoD OSD MILDEP JCS DTSA DSCA OFOISR NSA Country Team Customs
Elements of TAA and MLA Packages Transmittal Letter per ITAR 124.12 One original Certification Letter per ITAR 126.13 signed by an empowered official Proposed agreement – should be unsigned sign DTCL may impose changes Attachments (e.g., SOW, appendixes) – should be cross-referenced in the agreement Supporting materials (e.g., tech data sheets, curriculum, excerpts from tech data to be exported, drawings of defense articles to be produced under MLA, etc.)
What Is the Key “Do” to Preparing TAAs/MLAs? Read (i.e., memorize) DTCL’s Guidelines for Preparing TAAs/MLAs Develop a checklist from the Guidelines to use in preparing your company’s TAAs and MLAs “Best Practice”: Have person preparing agreement check off items, initial, and place in case file If you don’t use a checklist, reread the Guidelines every time you prepare a TAA or MLA
Other Key “Do’s” for Success Start by drafting agreement, not Transmittal letter Write precisely and concisely Focus on the basic elements of a license: country, commodity, end-user and end-use. Explain what you are not doing (may be more important). Review previous license provisos and incorporate into the language.
Key “Don’ts” in Preparing TAAs and MLAs Don’t attempt to combine your company’s commercial contract and its TAA or MLA Don’t use jargon or rely on program names. Technical data is inappropriately qualified or insufficiently described with the words: "to include, but not be limited to…" or "the scope and extent of the data shall be determined by the applicant and the end-use”
Elements of an Agreement Preamble Give full names and address of parties in bulleted list Provide for an explicit effective date for the agreement – don’t say “effective as of the date of the last party signing” Recitals Use recitals to describe background of the transaction and put it in context Use recitals to track prior licensing history Use recitals to explain roles of various parties
Elements of an Agreement Paragrah 1 – Provide concise overall description of the program or transaction the agreement is intended to support 124.7(1) – Provide description of defense articles to be exported in furtherance of the Agreement and whether they will be exported under separate license 124.7(2) – Provide description of technical data and defense services to be exported
Elements of an Agreement 124.7(3) – Provide for term of agreement and for termination or suspension by USG as well as termination by parties 124.7(4) Describe territory in which technical data and defense services will be provided Include language regarding dual nationals/third country national employees of foreign parties (see Section 10.2 of Guidelines) State whether “sublicensing” will occur – “sublicensing” versus “subcontracting”
Submitting and Packaging Agreements Number of copies to be submitted – new agreement: Original + 9 Copies: Requires Congressional notification (see Section 10.3). Highly sensitive commodity, country or transfer (submitters discretion). Original + 7 Copies: All other new agreements.
Submitting and Packaging Agreements A certification letter is not necessary in the copies of a submission package. Only one signed letter in the original package is required. The signature page for an agreement or amendment that has multiple signatories should be printed all on a single page if possible rather than a page for each signature. You can print a page for each signature for the signed copy, but for the proposal, a single sheet is preferred. Do not put into binders or notebooks as DTCL does not keep them due to file space. For the DTCL (original) copy, please do not use staples as this makes our processing more difficult. Use a large clip to hold together and avoid using smaller clips to separate sections of the proposal. For the copies, staples are fine and preferred. Use of tabs to separate sections of a package are neither required nor desired.
Classifying Spacecraft, Launch Vehicles, and Associated Equipment under U.S. Export Controls Presented to National Contract Management Association Cape Canaveral Chapter by Gary Stanley, Global Legal Services, PC, Washington, DC November 10, 2003
Who has commodity jurisdiction? As a general rule, space = defense = ITAR USML Category IV – Launch Vehicles, Guided Missles, Ballistics Missiles, Rockets USML Category XV – Spacecraft Systems and Associated Equipment
Transfer of Certain “Space Qualified” Items to Commerce In September 2002, State agreed, in theory, to transfer commodity jurisdiction over several “space qualified” items to Commerce See “Note” following Category XV(e) (includes certain space qualified traveling wave tubes, photovoltaic arrays, tape & data recorders, telecommunications systems, focal plane arrays, and laser radar or LIDAR equipment But see qualification in Note excluding items specifically designed or modified for “military applications”
Other items under Commerce “dual use” jurisdiction ECCN 9A004 – Space Launch Vehicles and “Spacecraft” Hardware for the International Space Station But: Technical data required for the detailed design, development, manufacturing, or production of the ISS (to include specifically designed parts and components remain under State jurisdiction –But: This does not include that level of technical data necessary and reasonable for assurance that a U.S.-built item intended to operate on the ISS has been designed, manufactured, and tested in conformance with specified requirements (e.g., operational, performance, reliability, lifetime, product quality, or delivery expectations)
Other items under Commerce “dual use” jurisdiction ECCN 9B115 & 9B116 - Specially designed “production equipment” and “production facilities” for the systems, sub- systems and components controlled by 9A004 to 9A009, 9A011, 9A101, 9A104 to 9A109, 9A111, 9A116 to 9A119. ECCN 9D001 & 9D002 - “Software” specially designed or modified for the “development” or “production” of equipment or “technology” controlled by 9A (except 9A018, 9A990 or 9A991), 9B (except 9B990 or 9B991) or 9E003. But: “Software” “required” for the “development” or “production” of items controlled by 9A004 is subject to the export licensing authority of State Watch out for “hidden” categories! E.g., ECCN 3A001.c.3 covers “space qualified” photovoltaic arrays that State transferred to Commerce in Sept. 2002
Overview of Export Controls, #23 28 Oct 04 JML FREIGHT HOUGHTON CHEMICAL INTERNATIONAL ATT Communications SWISSCO Illinois Tool Works Inc. SIGMA- ALDRICH Bet Air PAN AVIATION ICSINC AVS INDUSTRIAL SCIENTIFIC CORPORATION OMEGA CCP
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Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Your company pays a foreign sales agent to facilitate the sale or other transfer of ITAR- controlled items, and it doesn’t insist the agent register with State/DDTC or otherwise comply with the licensing and other requirements of ITAR Part 129. #10
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Your company’s president, who is also the president of your company’s French subsidiary, formally approves the French company’s proposed sale of French-origin equipment to Iran. #9
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) In a transaction involving a country subject to OFAC sanctions, your company obtains an OFAC license, but neglects to determine other agencies’ licensing requirements. #8
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Not having foreign subsidiaries screen against “denied parties” lists #7
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Ignoring obscure ITAR notification and certification requirements #6
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Not planning for export and import licensing requirements in all applicable jurisdictions #5
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Not conducting export control due diligence on corporate acquisitions and thus incurring “successor liability” for export control violations #4
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) Your company assumes the ITAR Canadian exemptions is a “blank check” for purposes of ITAR licensing requirements. #3
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) #2 Your company submits an export license application to the U.S. Department of State to sell defense technology to the People’s Republic of China.
Gary Stanley’s Top Ten List of Export Control Bloopers (with due apologies to David Letterman) #1 Your company’s president thinks EAR refers to a body part.