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Defense Trade Advisory Group Harmonization of Fundamental Research Plenary Session May 9, 2013.

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Presentation on theme: "Defense Trade Advisory Group Harmonization of Fundamental Research Plenary Session May 9, 2013."— Presentation transcript:

1 Defense Trade Advisory Group Harmonization of Fundamental Research Plenary Session May 9, 2013

2 2 Dava Casoni, Co-Chair, University of Southern California Michael Miller, Co-Chair, University of Central Florida Brooke Butler, Globaleyes Stephen Cope, Avion Solutions Sandra Cross, Huntington Ingalls BJ Demery, Bell Helicopter Kim DePew, GE Aviation Barbara Dudas, Northrop Grumman Lawrence Fink, SAIC Alfred Furrs, Johns Hopkins University, Applied Physics Lab Beth Parrish, Lockheed Martin Deborah Shaffer, Southwest Research Institute George S. Sevier, Sam Sevier LLC William Wade, L3 Communications Working Group Members

3 3 Discussion Agenda Tasking Methodology History Proposed Harmonized Definition Analysis Comparison, Observations, Perspectives Recommendations to Harmonize Definition Summary Back-Up 3

4 4 Review the various U.S. Government definitions of ‘fundamental research’ in use and recommend a harmonized definition that can be used in both the ITAR and the EAR. DTAG Tasking

5 5 Methodology Reviewed Definitions & History Compared ITAR and EAR Surveyed Industry and Academic Interpretations of FR Drafted and Evaluated Harmonized Definition Proposed Harmonized Definition

6 6 ITAR DHHS 45 CFR 74.2 Various Dictionaries EAR DOE 10 CFR (b) National Institute of Health FAR DHHS 45 CFR Case Law & Law Reviews OMB Circular A-110 FDA 21 CFR 50.3(c) NSDD OMB Circular A-133 DOD 32 CFR DARPA Definitions

7 7 History  1919: Restriction of First Amendment free speech for national security reasons  1970’s: Export control regulations enacted, constitutionality questioned  1980’s:  1982: OSTP: cost/benefit analysis  1985: National security classification should be the mechanism to restrict (NSDD-189)  1993: now includes a definition of fundamental research consistent with NSDD-189 (53 FR 39280)  2000’s: OIG/deemed export concerns, reiteration of NSDD-189 in memos, attention to input v. conduct v. results

8 8 Assumptions Proposed definition of “Defense services” or similar variant will become a final rule. (April 13, 2011; 76 Federal Register 20592) Proposed revisions to 22 CFR 124.1(a) will be implemented. (April 13, 2011; 76 Federal Register 20591)

9 9 Proposed Harmonized Definition § Public Domain (a) Public Domain means… (8) Through fundamental research as defined in §120.XX. § 120.XX Basic Research Basic research is a systemic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts. § 120.XX Applied Research Applied research is a systematic study to gain knowledge or understanding necessary to determine the means by which a recognized and specific need may be met. It is a systematic application of knowledge toward the creation of useful materials, devices, and systems or methods, including design, development and improvement of prototypes and new processes to meet specific requirements.

10 10 § 120.XX Fundamental Research (a)Fundamental research is basic and applied research the results of which may be disseminated without restriction (see “Research Restrictions” in § 120.XX of this subchapter) [or] (See EAR § [new section of the EAR] and, accordingly, such research is not subject to U.S. export controls. (b)Fundamental research is not limited to performance at accredited U.S. institutions of higher learning and may be conducted by other persons (see ). (c)The information resulting from fundamental research shall remain unrestricted to the maximum extent possible and; where national security requires control, the mechanism for control of information generated during federally-funded fundamental research in science, technology and engineering at colleges, universities and laboratories is national security classification. Proposed Harmonized Definition

11 11 Proposed Harmonized Definition § 120.XX Research Restrictions (a)Research is restricted if: (1) The research is funded by the U.S. Government and includes specific access and dissemination controls to protect information resulting from the research; or (2) Dissemination of the information resulting from the research is restricted or not published for proprietary reasons, (with the exception of prepublication editorial review to ensure proprietary information is not released or patent rights compromised). Our task was to harmonize: both regulations consider proprietary research to be restricted, therefore we included (ii). However, DTAG proposes deleting this language. Whether research is proprietary or not is irrelevant in making an export control determination.

12 12 Proposed Harmonized Definition (b) The following prepublication reviews are not research restrictions: 1)Reviews to ensure that information subject to specific access or dissemination controls (such as Controlled Unclassified or Sensitive But Unclassified Information) is not released, when such information is provided by the U.S. Government for research; 2)Reviews to ensure compliance with statutory or funding agency requirements other than export controls; 3)Reviews to ensure that publication would not inadvertently divulge trade secret information furnished by the sponsor; or 4)Reviews to ensure that publication would not compromise patent rights.

13 13 Guidance to Academia and Industry Update and Harmonize current Commerce and State FAQs (slide 20) Guidance to Funding Government Agencies & Other Funding Entities Reminder that Commerce and State have jurisdiction Need clear and harmonized guidance to funding agencies that classification is the mechanism for control and that contractual restrictions should only be included when they are strictly necessary and directly related to national security concerns Proposed Harmonized Guidance

14 14 EAR/ITAR Analysis Definitions are similar; harmonious with NSDD 189, national FR policy Both include: basic and applied research results ordinarily published/publicly available distinguishable from other research results with proprietary or national security restrictions Differences: EAR - 15 sections; several performance locations ITAR - 3 sections; U.S. as the locus; specific to institutions of higher learning DTAG explored: Aspects of FR: Input, Conduct and Output (slide 16) Complex stakeholder perspectives

15 15 Comparison

16 16 Aspects Unrestricted Input, Conduct or Output Restricted Input, Conduct or Output Mixed: Fundamental + Controlled Restricted Input Restricted Conduct Restricted Output Not Fundamental Research Unrestricted Input Unrestricted Conduct Unrestricted Output Fundamental Research

17 17 Perspectives Approach to Jurisdiction/Exemption University: Fundamental research analysis No access, dissemination, publication or participation restrictions = no basis for excluding non-U.S. researchers, unless Defense Article Industry: Jurisdictional analysis identifies EAR vs. ITAR EAR controlled = look for publication restrictions ITAR controlled = no fundamental research exclusion Complication Industry and university research collaboration is complex due to mixed licensing requirements Industry research may taint “fundamental research” conducted by a university Approach to Publication University: Intend to publish all research, only accept restrictions where absolutely necessary Industry: Intent to place the research into the public domain is not always known at the onset of research

18 18 Survey Hypothetical Example Contract: U.S. Government funded contract to investigate the utilization of insects to detect Improvised Explosive Devices (IEDs) on the battlefield. Research: The research involved the exposure of insects to munitions grade explosives to sensitize the insects to recognize such explosives in the field. Response University: Omission of access and dissemination restrictions by the U.S. Government sponsor led them to conclude that the project work would qualify as fundamental research. Several respondents noted that the explosives require restrictions on handling explosives but the project was otherwise unrestricted and the project work could be published. Industry: Considered munitions grade explosives as Category V defense articles and treated the project as ITAR controlled. Accordingly, Industry would require government approval for foreign participants. Survey Conclusion Universities and industry treat the same work differently from inception to publication.

19 19 Considerations Proposed harmonized “fundamental research” definition should consider: Character of research; Existence of national security classifications; Existence of specific access and dissemination restrictions; Physical location of performance is inconsequential; Fundamental research is performed by various entities; Distinction between research input, conduct and output; Color of money used to fund the research (e.g., 6.1, 6.2, 6.3, etc.) is not determinative of FR application; When fundamental research stops being fundamental and becomes subject to export controls. [Not proprietary]

20 20 Steps To Harmonize Define basic, applied, fundamental research and research restrictions in §772.1 of the EAR and in new sections of the ITAR (Sections (120.XX) Modify EAR (e.g. §734.8 and ) and ITAR (e.g., § and §120.XX) to adopt DTAG proposed harmonized definition Clarify and consolidate Supplemental Guidance in the EAR in Supplement No. 1 to Part 734 Create Fundamental Research Guidance for the ITAR in “Frequently Asked Questions (FAQs) in Defense Trade” Clarify what is defense service vs. fundamental research Other sections might be impacted by the DTAG proposed definition of “fundamental research” so perform final review before implementing

21 21 Additional ITAR Changes  Section (b)(10): temporary export and return exemption not be limited to “accredited U.S. institutions of higher learning”  125.4(c)(3): delete definition of “basic” and “applied” and refer to proposed DTAG definitions  125.4(d): delete “accredited U.S. institutions of higher learning” throughout this section, except 125.4(b)(10)  USML Category VIII(f): clarify application of “fundamental research” under U.S. Department of Defense contracts

22 22 DTAG proposes clear definitions of Fundamental Research, Basic Research, Applied Research and Restricted Research which will work well together in both the EAR and the ITAR DTAG assumes proposed changes to Defense Service and Technical Data will be implemented which will further clarify application of Fundamental Research DTAG proposal: Preserves access and dissemination restrictions [and proprietary information] as distinguishing characteristics of unclassified research Clarifies that in absence of restrictions/[proprietary information], research is fundamental Provides a “bright-line” for clarity and consistency of implementation and enforcement Summary

23 Questions?

24 Back Up Information

25 25 NSDD - 189

26 26 DoD Memo on “Fundamental Research” 24 MAY 2010

27 27 DoD Memo on “Fundamental Research” 24 MAY 2010

28 28 DoD Memo on “Contracted Fundamental Research” 26 June 2008

29 29 DoD Memo on “Contracted Fundamental Research” 26 June 2008

30 30 Aspects of FR The definition clarifies that (1) the inclusion of defense articles in the conduct of research does not preclude the outcomes of the research from potentially qualifying as FR (2) that industry can now handle their research the same as academia. Same measuring stick applied to all entities

31 31 Various Definitions of Fundamental Research Reviewed  ITAR, 22 CFR Section  EAR, 15 CFR Section  Federal Acquisition Regulation Title 32 – National Defense Part 272 (section 272.3)  OMB Circular A-110  OMB Circular A-133  45 CFR 74.2  NIH website glossary  DHHS definition (45 CFR )  FDA definition (21 CFR 50.3(c))  Merriam-Webster dictionary  American Heritage Dictionary  Collins English Dictionary  Department of Defense, 32 CFR Section  NSDD-189; National Policy on the Transfer of Scientific, Technical and Engineering Information  DARPA definition (http://www.darpa.mil/Opportunities/Universities/Fundamental_Research.aspx)http://www.darpa.mil/Opportunities/Universities/Fundamental_Research.aspx

32 32 Various Definitions of Fundamental Research Reviewed  ITAR, 22 CFR Section  EAR, 15 CFR Section  Federal Acquisition Regulation Title 32 – National Defense Part 272 (section 272.3)  OMB Circular A-110  OMB Circular A-133  45 CFR 74.2  NIH website glossary  DHHS definition (45 CFR )  FDA definition (21 CFR 50.3(c))  Merriam-Webster dictionary  American Heritage Dictionary  Collins English Dictionary  Department of Defense, 32 CFR Section  NSDD-189; National Policy on the Transfer of Scientific, Technical and Engineering Information  DARPA definition (http://www.darpa.mil/Opportunities/Universities/Fundamental_Research.aspx)http://www.darpa.mil/Opportunities/Universities/Fundamental_Research.aspx

33 33 History  1978 DOJ Office of General Counsel legal opinion: certain applications of the ITAR are unconstitutional impositions on the dissemination of scientific ideas.  1978, U.S. v. Edler: violations of ITAR technical data licensing scheme punishable only when the violator is knowing and intentional.  1982, Richard DeLauer: no restriction can be placed on conduct or reporting of research that has not received national security classification.  1982, OSTP studies benefits of USG restrictions on unclassified scientific research against costs of impeding scientific and technical progress, resulting in NSDD-189.  1985, NSDD-189: where national security requires control, the mechanism ought to be classification.  1993, 58 FR July 22  2010, Ashton Carter: products of fundamental research are to remain unrestricted to the maximum extent possible, when control is necessary for national security reasons, classification is the only appropriate mechanism.

34 Comparing EAR to ITAR Associated Definitions EAR 734.3(b)(2),(3) “Publically Available” Published information and software 734.7(a) Accessible to Public 734.7(a)(2) Available at Libraries 734.7(a)(3) Patents and patent applications (see also ) 734.7(a)(4) Open conference, seminar, tradeshow Spread across multiple sections: 734.8(a), (b)(2)(3), (d)(2)(3)(a) ITAR “Public Domain” (a) Generally accessible/available to public (a)(1) On sale at newsstands and (2) subscriptions and (3) through 2 nd class mailing privileges (a)(4) Libraries open to the public (a)(5) Patients available at any patent office (a)(6) Conference, meeting, seminar, tradeshow accessible to public (a)(7) Public release 34

35 Comparing EAR to ITAR Definitions, Cont’d. EAR 734.8(a), “Fundamental Research” 734.8(b) University based research 734.8(c) Research based at federal agencies 734.8(d) Corporate research 734.8(e) Research based elsewhere Educational information Patent applications (a) Govt sponsored research Part 772 Definition of “Basic Scientific Research” (not “Applied”) , “Public Domain” (a)(8) Fundamental research No equivalent (a)(5) and (a)(6) general scientific principles (a)(5) Patents (a)(8)(i),(ii) University restrictions on publications 125.4(c)(3) Basic Research and Applied Research 35

36 Comparing EAR to ITAR Guidance EAR Supplement No. 1 to Part 734 Section C: Educational instruction Section D: Research, correspondence and informal scientific exchanges Section E: Federal contract controls ITAR No equivalent No equivalent 36

37 Comparing EAR to ITAR USML EAR No equivalent No equivalent ITAR Category VIII(f), Developmental aircraft and specifically designed parts, components, accessories and attachments therefor funded by the Department of Defense Category XI(a)(7) Any experimental or developmental electronic equipment specifically designed or modified for military application or specifically designed or modified for use with a military system 37

38 Comparing EAR to ITAR Exemptions EAR No equivalent Partial equivalent ; Disjointed - Part 732 Steps to follow to determine requirements No equivalent No equivalent; Part 772 defines “Basic scientific research” ITAR 122.1(b)(2), (4) Registration exemption (b)(10) Cat XV(a),(e) articles fabricated for fundamental research purposes 125.4(b)(10) bona fide employee 124.5(b)(13) Technical data approved for public release 125.4(c)(3) Basic and Applied research 38

39 Comparing EAR to ITAR Exemptions, Cont’d. EAR No equivalent; Reliant upon definitions of development, production and use No equivalent ITAR 125.4(d)(1) Defense services for (b)(10) for universities 125.4(d)(2) Space scientific meetings defense services by universities, including specific limitations Pursuant to UK Defense Trade Cooperation Treaty 39

40 (a) Definition (b)(1) University-based research (b)(2) Prepublication review for proprietary information (b)(3) Prepublication review for patent information (b)(4) Initial transfer agreement to restrict (b)(5) Publication and other restrictions (b)(6) National security controls (c) Research based at Federal agencies or FFRDCs (d)(1) Corporate research (d)(2) Prepublication review for proprietary information (d)(3) Prepublication review for patent rights (d)(4) Initial transfer agreement to restrict (e) Research based elsewhere (a) Government-sponsored research (b) Specific national security controls EAR Definition

41 (a)(8) Definition (includes publication restrictions) (a)(8)(i) Non-publication restrictions (a)(8)(ii) Specific national security controls ITAR Definition


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