Export-controlled items and treaty exports in DFARS

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1. What the subpart covers

The Defense Federal Acquisition Regulation Supplement (DFARS) has a short subpart on export control in defense contracts. It implements section 890(a) of the National Defense Authorization Act (NDAA) for Fiscal Year 2008 (DFARS 225.7900(a)). It also implements the export control requirements of Title I of the Security Cooperation Act of 2010 and of the Defense Trade Cooperation (DTC) Treaties with Australia and the United Kingdom (DFARS 225.7900(b)). The regulation points to Procedures, Guidance and Information (PGI) 225.7902 for additional information.

After a scope section, the subpart has two substantive sections. The first, on export-controlled items, implements the NDAA provision (DFARS 225.7901). The second implements the DTC Treaties and their Implementing Arrangements for solicitations and contracts that let contractors use the treaties when responding and when performing (DFARS 225.7902).

2. The laws behind export controls

Certain types of items are subject to export controls under four sources of law (DFARS 225.7901-2). Two are statutes, the Arms Export Control Act (AECA) and the Export Administration Act of 1979, as amended. The other two are the International Traffic in Arms Regulations (ITAR) at title 22 of the Code of Federal Regulations (CFR), parts 120 to 130 and the Export Administration Regulations (EAR) at 15 CFR parts 730 to 774. The term export-controlled items is defined by reference to the clause at 252.225-7048 (DFARS 225.7901-1).

The policy has two parts. It is in the interest of both the Government and the contractor to be aware of export controls as they apply to the performance of defense contracts (DFARS 225.7901-3(a)). It is the contractor's responsibility to comply with all applicable laws and regulations regarding export-controlled items (DFARS 225.7901-3(b)). That responsibility exists independently, and the section neither establishes nor limits it. The clause at 252.225-7048, Export-Controlled Items, is used in all solicitations and contracts (DFARS 225.7901-4).

3. The export-controlled items clause

The clause carries a June 2013 date (DFARS 252.225-7048). It defines export-controlled items as items subject to the EAR or the ITAR (DFARS 252.225-7048(a)). The term includes defense items, defined in the AECA as defense articles, defense services and related technical data, and further defined in the ITAR (DFARS 252.225-7048(a)(1)). It also includes items, defined in the EAR as commodities, software and technology, terms the EAR defines at 15 CFR 772.1 (DFARS 252.225-7048(a)(2)).

The contractor shall comply with all applicable laws and regulations regarding export-controlled items, including the requirement to register with the Department of State under the ITAR (DFARS 252.225-7048(b)). Questions on ITAR compliance go to the Department of State, and questions on EAR compliance go to the Department of Commerce. As in the policy section, the contractor's duty exists independent of the information the clause provides (DFARS 252.225-7048(c)).

Nothing in the contract adds, changes, supersedes or waives the requirements of applicable federal laws, executive orders and regulations (DFARS 252.225-7048(d)). The clause names, among others, the Export Administration Act of 1979, the AECA, the International Emergency Economic Powers Act, the EAR, the ITAR and Executive Order 13222, as extended (DFARS 252.225-7048(d)(1) to DFARS 252.225-7048(d)(6)). The contractor includes the substance of the clause, including its flowdown paragraph, in all subcontracts (DFARS 252.225-7048(e)).

4. How the treaties work

The DTC Treaties permit the export of certain U.S. defense articles, technical data and defense services without U.S. export licenses or other written authorization under the ITAR (DFARS 225.7902-2). The exports must move into and within the Approved Community and support purposes specified in the treaties. The Approved Community consists of U.S. entities registered with the Department of State that are eligible exporters, the U.S. Government, and certain governmental and commercial facilities in Australia and the United Kingdom that the U.S. Government approves and lists.

Requirements outside the DFARS and ITAR on importing defense articles and services, or on possessing or transferring defense articles, continue to apply (DFARS 225.7902-2). They include regulations of the Bureau of Alcohol, Tobacco, Firearms and Explosives at 27 CFR parts 447, 478 and 479, which the treaties do not affect. The Department of Defense (DoD) will facilitate maximum use of the treaties by prospective contractors responding to solicitations and by contractors eligible to export qualifying defense articles (DFARS 225.7902-3). It does so in accordance with 22 CFR 126.16(g) for Australia and 22 CFR 126.17(g) for the United Kingdom.

5. Program manager and contracting officer steps

For all solicitations and contracts that may be eligible for treaty coverage, the program manager identifies certain information in writing (DFARS 225.7902-4(a)). It goes to the contracting officer before a solicitation is issued and before a contract is awarded. The first item is the qualifying treaty scope paragraph, which is Article 3(1)(a), 3(1)(b) or 3(1)(d) of either treaty (DFARS 225.7902-4(a)(1)). The second is the qualifying defense articles, using the categories in the two State Department rules (DFARS 225.7902-4(a)(2)).

If applicable, the program manager also identifies any specific Part C treaty-exempted technology list items, and terms and conditions for the applicable contract line item numbers (CLINs) (DFARS 225.7902-4(b)). Terms such as Approved Community, qualifying defense articles and U.S. DoD Treaty-eligible requirements are defined in the clause at 252.225-7047 (DFARS 225.7902-1).

The 252.225-7047 clause is used in solicitations and contracts when two conditions are met (DFARS 225.7902-5(b)(1)). Export-controlled items must be expected in performance with the 252.225-7048 clause in use, and at least one CLIN must be intended to satisfy a U.S. DoD Treaty-eligible requirement. The contracting officer completes paragraph (b) of that clause with the information the program manager provided (DFARS 225.7902-5(b)(2)). The provision at 252.225-7046 goes in solicitations containing the 7047 clause (DFARS 225.7902-5(a)).

6. The solicitation provision

Under the provision, all CLINs in the contemplated contract are intended to satisfy U.S. DoD Treaty-eligible requirements except those it lists (DFARS 252.225-7046(b)). Specific defense articles that are not treaty-eligible are identified within CLINs that are otherwise eligible. Approved Community members responding may only export or transfer defense articles that specifically respond to the stated requirements of the solicitation (DFARS 252.225-7046(c)). They are permitted, but not required, to use the treaties for exports or transfers of qualifying defense articles in preparing a response (DFARS 252.225-7046(d)).

Offeror conduct outside the scope of the treaties, the Implementing Arrangements and the State Department implementing rules, including the exempted technologies list, remains subject to all applicable ITAR requirements (DFARS 252.225-7046(e)). Those requirements include criminal, civil and administrative penalties or sanctions. An offeror that uses the treaty procedures agrees to comply with the treaties, the Implementing Arrangements and the corresponding regulations of both governments concerned (DFARS 252.225-7046(f)(1)).

Before any export or transfer, the offeror also marks, identifies, transmits, stores and handles the defense articles under those rules, and complies with their re-transfer and re-export provisions (DFARS 252.225-7046(f)(2)(i) and DFARS 252.225-7046(f)(2)(ii)). It acknowledges that conduct outside or in violation of them remains subject to the licensing requirements of the governments concerned (DFARS 252.225-7046(f)(2)(iii)). The offeror checks one of two boxes, representing either that treaty exports or transfers were made and complied with the provision or that none were made (DFARS 252.225-7046(g)). The provision flows down, except for the representation, to any subcontractor at any tier intending to use the treaties in responding (DFARS 252.225-7046(h)).

Key terms

Export-controlled items	Items subject to the EAR or the ITAR, as defined in 252.225-7048.
DTC Treaties	The defense trade cooperation treaties with Australia and the United Kingdom.
Approved Community	The registered U.S. entities, U.S. Government and listed foreign facilities that may use the treaties.
Treaty scope paragraph	The treaty article the program manager identifies for coverage.
Part C exempted items	Technology list items excluded from treaty treatment.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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