What a license application must show

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1. What goes into an application

Under the International Traffic in Arms Regulations (ITAR), each request comes with a signed letter. Every license application, agreement request and request for other written authorization must include one from an empowered official of the applicant, addressed to the Directorate of Defense Trade Controls (DDTC) (22 CFR 126.13(a)). That covers the standard license forms, part 124 agreements and their amendments, and requests for retransfer or reexport. The letter must answer four questions.

The first two concern the applicant’s own people (22 CFR 126.13(a)(1) and 22 CFR 126.13(a)(2)). The letter states whether the applicant, or any of its senior officers, partners, members or directors, faces an indictment or charge, or has a conviction, for breaking one of the listed criminal statutes. It also says whether any of them is barred from contracting with, or receiving import or export authorizations from, any federal agency. The third asks, to the best of the applicant’s knowledge, whether any party to the export has been convicted under those statutes or is barred from contracting or receiving authorizations (22 CFR 126.13(a)(3)). The fourth states whether the person signing is an American citizen or national, a lawful permanent resident, a foreign government official in the United States, or a foreign person seeking a reexport or retransfer (22 CFR 126.13(a)(4)).

2. Naming every party

License applications must give the full names and addresses of all American consignors and freight forwarders, and all foreign consignees and intermediate consignees (22 CFR 126.13(b)). Customs port directors and Defense Department transmittal authorities let only those listed parties ship, and only to the listed foreign consignees. The regulation advises listing every freight forwarder who might be involved, to avoid amendments later. Where unusual circumstances prevent naming them all, a letter of explanation must go with the application. Where foreign nationals work at security-cleared facilities, a technology control plan will help processing (22 CFR 126.13(c)).

3. What a license covers

Unless a condition limits it, a license covers the items, end uses and parties described in the application and any letters of explanation (22 CFR 123.28). DDTC grants licenses relying on what the applicant said in those documents. Who may apply at all is covered in authorizations and who may hold them.

4. Four years, or until used

A license is valid for four years (22 CFR 123.21(a)). It expires when the full value or quantity has been shipped, or when the expiration date arrives, whichever comes first. Later shipments need a new application and license, which should refer to the expired license and cover only its unshipped balance. Unused, expired, suspended or revoked licenses are handled under the return rules in section 123.22 (22 CFR 123.21(b)). Those return rules are covered in filing export information for ITAR shipments.

5. A ten percent margin on value

Customs port directors must allow shipments whose total value exceeds the dollar value on the license by up to ten percent (22 CFR 123.23). The margin is in value, not quantity. It has two limits. The extra value may not take a contract for major defense equipment to $14 million or more, or a contract for defense articles or services to $50 million or more.

6. What an amendment can and cannot change

DDTC may amend licenses for permanent export, temporary export and temporary import of unclassified defense articles (22 CFR 123.25(a)). Four kinds of amendment will be considered (22 CFR 123.25(b)). They are adding an American freight forwarder or consignor, correcting an obvious typing error, changing the source of the commodity, and changing a foreign intermediate consignee that only transports the equipment and will not process it. Changes in dollar value follow the ten percent rule instead.

The changes listed in the regulation need a new license (22 CFR 123.25(c)). Amendments will not be approved for more quantity, a different commodity, a new country of ultimate destination, a new end use or end user, a different foreign consignee or a longer duration. A foreign intermediate consignee can be changed only if it acts as freight forwarder and no technical data is involved. A new application must cover only the unshipped quantity and value.

7. Eligibility cuts across all of this

Licenses and approvals may be refused or revoked in several eligibility cases. They include an applicant charged with a listed offense, an applicant or party convicted of one, and an applicant or party debarred or otherwise ineligible (22 CFR 120.18(a)(3), 22 CFR 120.18(a)(4) and 22 CFR 120.18(a)(6)). They may also be refused or revoked where an applicant leaves out required information or documents (22 CFR 120.18(a)(7)).

8. The statutes that count

The regulations list the criminal statutes that trigger these questions (22 CFR 120.6). They start with section 38 of the Arms Export Control Act and the Commerce export control statutes. They include espionage involving defense or classified information, financial dealings with terrorism-supporting governments, material support to terrorists and terrorist financing. The Trading with the Enemy Act, the International Emergency Economic Powers Act and the Foreign Corrupt Practices Act are on the list. So are sabotage, atomic energy offenses, and conspiracy to break any listed statute.

Some general crimes count only when they involve defense articles or ITAR breaches (22 CFR 120.6(n) through 22 CFR 120.6(q)). These are false statements on imports, smuggling into or out of the United States, false statements generally, economic espionage and theft of trade secrets.

9. What may be disclosed

Information gathered for license applications is withheld from the public unless the Secretary of State decides releasing it serves the national interest (22 CFR 120.21(b)). The names of countries and the types and quantities of articles licensed are released unless a contrary determination is made, and those determinations are made by the Assistant Secretary of State for Political-Military Affairs. The Secretary has decided that two kinds of disclosure are in the national interest (22 CFR 120.21(d)). One is giving information to foreign governments for law enforcement or regulatory purposes. The other is giving it to foreign governments and other American government agencies within multilateral or bilateral export regimes, such as the Missile Technology Control Regime, the Australia Group and the Wassenaar Arrangement.

Key terms

Empowered official	The responsible official who signs the required statement for an application.
Unshipped balance	The quantity and value left on an expired license, the only scope a new application may carry.
Value tolerance	The ten percent over the licensed dollar value that customs may allow.
License amendment	A limited change to a license, such as adding a freight forwarder.
Technology control plan	A plan that helps processing where foreign nationals work at cleared facilities.

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.

How Sentfore supports this

Naming every freight forwarder and consignee up front saves amendments later. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.