RESTRICTIVE TROUBLESOME CLAUSES IMPACTING EXPORT COMPLIANCE

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RESTRICTIVE TROUBLESOME CLAUSESIMPACTING EXPORT
COMPLIANCE

• Various Federal Agencies

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EXPORT REGULATIONS

• Real exposure for universities
• Effect more intense sweeping since 9/11
• Applicable Rules Regs are complex often
  difficult to interpret apply
• Not just Sponsored Programs impact. Across the
  institution.

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COGR/AAU Troublesome Clause Survey of 2003-2004

• Recently updated
• Situation (frequency/type of restriction
  encountered) has not improved. Expansion in
  scope nature of controls received.
• New types of restrictions also reported,
  especially sensitive but unclassified and
  background checks requirements.

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QUICK REVIEW

• EXPORT defined as any oral, written, electronic
  or visual disclosure, shipment, transfer or
  transmission of commodities, technology,
  information, technical data, assistance or
  software codes to
•  anyone outside the US including a US citizen
•  a non-US individual wherever they are (deemed
  export)
•  a foreign embassy or affiliate
• DEEMED EXPORT transfer of controlled technology
  to foreign persons, (usually in the US), where
  the transfer is regulated because it is deemed
  to be to the country where the person is a
  resident or a citizen.

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QUICK REVIEW

• Deemed Export can commonly be released through
• Visual Inspection by foreign nationals of US
  origin equipment and facilities.
• Oral exchanges of information in the US or
  abroad.
• Application to situations abroad of personal
  knowledge or technical experience acquired in the
  US.
• NOTE Concept of Deemed Export applies to
  information and technical data, not to actual
  controlled materials or items without any
  associated information.

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Primary US laws/regs governing Export Control

• International Traffic in Arms (ITAR) (Dept of
  State)
• Directorate of Defense Trade Controls (DDTC)
• Export Administration Regulations (EAR)
• (Dept of Commerce)
• Bureau of Industry Security (BIS)
• Office of Foreign Assets Control (OFAC)
• (Dept of Treasury)

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ITAR

• Controls export of Defense Articles and
  Defense Services
• Military Hardware, Systems, Equipment, Weapons,
  Missile and Satellite technology, WMDs including
  Chemical Biological Agents
• Specifically designed, developed, configured,
  adapted or modified for a military application,
  and, designating and determining defense articles
  and services,
• Does not have predominant civil application, and
• Does not have performance equivalent (defined by
  form, fit and function) to those of an article or
  service used for civil applications or
• -- Is specifically designed, developed,
  configured, adapted, or modified for a military
  application and has significant military or
  intelligence applicability such that control
  under the ITAR is necessary

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ITAR

• Items categorized on the ITAR MUNITIONS LIST
  (USML)
• Defense Services include furnishing assistance
  to foreign persons, whether or not in the US,
  with respect to defense articles, and furnishing
  of any technical data associated with a defense
  article.
• http//www.fas.org/spp/starwars/offdocs/itar/p121.
  htm

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EAR

• Covers commercial technologies
• Covers dual use technologies, i.e.
  predominantly civilian uses but also have
  military and proliferation applications, or may
  be used in terrorist activities.
• Items categorized on the Commerce Control List
  (CCL) - ten broad categories.
• Specific restrictions depend on specific
  technology and where it is being exported.
• http//www.access.gpo.gov/bis/ear/ear_data.html

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OFAC

• Administers sanctions that apply to certain
  nations
• Regulates transfer of assets or services to those
  countries (sanctions freezing assets)
• May prohibit travel/other activities with
  sanctioned countries persons even when
  exclusions to EAR/ITAR apply
• http//www.ustreas.gov/offices/enforcement/ofac/

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FUNDAMENTAL RESEARCH EXEMPTION

• Both ITAR EAR include language that excludes
  the results of Fundamental Research from
  requirements for export licenses or other
  government approval.
• The exclusion applies to basic and applied
  research in science and engineering performed by
  US accredited institutions of higher learning so
  long as that research is carried out openly and
  without restrictions on publications,
  disseminations or foreign national access.

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FUNDAMENTAL RESEARCH EXEMPTION

• The research-generated information is ordinarily
  published and shared broadly in the scientific
  community, as distinguished from research results
  which are restricted for proprietary reasons or
  specific US government access and dissemination
  controls.
• The products of fundamental research are not
  subject to export license requirements or other
  government approval.

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OTHER EXCLUSIONS

• Exclusions for Information that is Publicly
  Available or in the Public Domain.
• ITAR already published
• EAR will be published
• Examples open libraries, published patents,
  conferences, trade shows open to public, websites
• Educational Exclusions from EAR and ITAR
• The BONA FIDE EMPLOYEE exemption

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Clauses of Concern

• Primarily relate to two areas
• Control of publications/release of information
  via review and approval by the agency.
• Restriction on access to program technical data,
  information, hardware, systems, etc. by foreign
  nationals (i.e. non US citizens, non Greencard
  holders)
• Most often encountered in awards from DoD
  agencies, although found in other agencies
  documents. Primarily in contracts, although now
  encountered at times in grants and cooperative
  agreements.
• Bit more success in negotiating direct awards
  from the feds versus subcontracts from primes.

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Extract from the EARs definingSpecific National
Security Controls

• 734.11 Government-Sponsored Research Covered by
  Contract Controls
• (b) Examples of specific National Security
  Controls include requirements for prepublication
  review by the Government, with right to withhold
  permission for publication restrictions on
  prepublication dissemination of information to
  non-US citizens or other categories of persons
  or restrictions on participation of non-US
  citizens or other categories of persons in the
  research.

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DFAR 252.204-7000

• 204.404-70 Additional contract clauses
• (a) Use the clause at 252.204-7000, Disclosure of
  Information, in solicitations and
• contracts when the contractor will have access to
  or generate unclassified information
• that may be sensitive and inappropriate for
  release to the public.
• 252.204-7000 Disclosure of Information
• As prescribed in 204.404-70(a),use the following
  clause
• DISCLOSURE OF INFORMATION (DEC 1991)
• (a) The Contractor shall not release to anyone
  outside the Contractor's organization
• any unclassified information, regardless of
  medium (e.g., film, tape, document),
• pertaining to any part of this contract or any
  program related to this contract, unless-
• (1) The Contracting Officer has given prior
  written approval or
• (2) The information is otherwise in the public
  domain before the date of release.

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DFAR 252.204-7000

• b) Requests for approval shall identify the
  specific information to be released, the
• medium to be used, and the purpose for the
  release. The Contractor shall submit its
• request to the Contracting Officer at least 45
  days before the proposed date for release.
• (c) The Contractor agrees to include a similar
  requirement in each subcontract
• under this contract. Subcontractors shall submit
  requests for authorization to release
• through the prime contractor to the Contracting
  Officer

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AFMC 5352.227-9000EXPORT-CONTROLLED DATA
RESTRICTIONS

• 5327.9002 Provisions and clauses. (a) Insert
• the clause at 5352.227-9000, Export-Controlled
  Data Restrictions, substantially as written, in
  Section I when the acquisition involves export
  controlled data.
• AFMC 5352.227-9000 EXPORT-CONTROLLED DATA
  RESTRICTIONS (AFMC) (JUL 1997)
• (a) For the purpose of this clause,
• (1) Foreign person is any person who is not a
  citizen or national of the US or
• lawfully admitted to the US for permanent
  residence under the Immigration and Nationality
  Act, and includes foreign corporations,
  international organizations, and foreign
  governments
• (2) Foreign representative is anyone,
  regardless of nationality or citizenship,
• acting as an agent, representative, official,
  or employee of a foreign government, a
  foreign-owned or influenced firm, corporation or
  person
• (3) Foreign sources are those sources (vendors,
  subcontractors, and suppliers) owned and
  controlled by a foreign person.
• (b) The Contractor shall place a clause in
  subcontracts containing appropriate export
  control restrictions, set forth in this clause.

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AFMC 5352.227-9000EXPORT-CONTROLLED DATA
RESTRICTIONS

• (c) Nothing in this clause waives any requirement
  imposed by any other US
• Government agency with respect to employment
  of foreign nationals or export
• controlled data and information.
• (d) Equipment and technical data generated or
  delivered under this contract are
• controlled by the International Traffic in
  Arms Regulation (ITAR), 22 CFR Sections 121
  through 128. An export license is required before
  assigning any foreign source to perform work
  under this contract or before granting access to
  foreign persons to any equipment and technical
  data generated or delivered during performance
  (see 22 CFR Section 125). The Contractor shall
  notify the Contracting officer and obtain written
  approval of the Contracting Officer prior to
  assigning or granting access to any work,
  equipment, or technical data generated or
  delivered under this contract to foreign persons
  or their representatives. The notification shall
  include the name and country of origin of the
  foreign person or representative, the specific
  work, equipment, or data to which the person will
  have access, and whether the foreign person is
  cleared to have access to technical data (DoD
  5220. 22-M, National Industrial Security Program
  Operating Manual (NISPOM)).

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52-227-4004 (TACOM)RELEASE OF INFORMATION

• The contractor shall ensure that he complies with
  the requirements of Ch 5, p.22, paragraph 5-48,
  of AR 306-1, The Army Public Affairs Program, dtd
  15 Sept 2000, prior to contemplated release of
  any procurement information. Approval of the
  Contracting Officer is required prior to release
  of any such information. AR 360-1 may be found
  at http//www.usapa.army.mil/pdffiles/r360_1.pdf
• (Procedures for reviewing and clearing material
  are at appendix D of ARO 360-1)

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APPENDIX DARO 360-1(extract)

• Clearance Release of Contractor Materials
  Info
• D-1
• c. Department of the Army agencies or educational
  institutions will not release procurement
  information on Army contracted research and
  development projects without prior approval or
  clearance.
• e. When unclassified contracts do not give
  specific instructions on releasing information,
  contractors should submit informational materials
  prior to publication to a PA (Public Affairs)
  office designated by the administrative
  contracting officer. If the submission is made to
  any other office, it will be referred immediately
  to the proper ACO for action (review approval).

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APPENDIX DARO 360-1(extract)

• D-2
• b. Scientific and technical information will not
  be released if it discloses classified military
  applications
• or, if unclassified, disclosure would be
  adverse to the national interest.
• c. Export and ITAR restrictions may also govern
  release of certain informationApproval from OASD
  is required for such a release.

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FAR 52.227-17 RIGHTS IN DATA SPECIAL WORKS

• (d) Release and use restrictions. Except as
  otherwise specifically provided for in this
  contract, the Contractor shall not use for
  purposes other than the performance of this
  contract, nor shall the Contractor release,
  reproduce, distribute, or publish any data first
  produced in the performance of this contract, nor
  authorize others to do so, without written
  permission of the Contracting Officer.

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WHAT IMPACT IF ABOVE ACCEPTED?

• By agreeing to these clauses as written, the
  institution is effectively waiving its normal
  Fundamental Research Exemption and would be
  liable for compliance with all applicable Export
  Regulations.
• Contradicts Free Publication and Dissemination as
  inherent principals of academic pursuit and
  mission.
• If not clearly a Classified program,
  restrictions on foreign persons working on or
  having access to program technology and data
  could be interpreted as violating institutional
  non-discrimination policies.
• If institution eventually found in violation of
  Export Regulations, at a minimum significant
  penalties and fines.

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The SUTI/SBU Problem

• Sensitive But Unclassified Technical
  Information
• Who can define it?
• When can/would it be defined?
• What, if any, are the limits of government
  discretion?
• Does one assume the government will act
  arbitrarily?
• Govt will indicate Although the work is RD we
  do not know what path it will take therefore in
  case it develops into something non-fundamental
  they are protected.

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THE COLOR OF MONEY

• DoD has confirmed that the type of appropriation
  funding the effort should determine whether
  inclusion of various restrictive clauses should
  occur.
• For 6.1 and 6.2 funding, restrictive clauses seen
  above should not be included.
• There has been an obvious inconsistency and
  disconnect between DoD level (Pentagon) policy
  and the interpretation and implementation by
  various acquisition level commands (e.g. TACOM).

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FYIDoD Funding Categories

• 6.1 Funding Basic Research
• 6.2 Funding Applied Research
• 6.3 Advanced Technology Development
• 6.4 Demonstration and Validation

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National Security Directive

• NSDD 189 (September 1985)
• States the products of fundamental research
  remain free from publication or other
  restrictions, and that the correct mechanism for
  control of information generated during federally
  funded fundamental research in science,
  technology and engineering at colleges,
  universities and laboratories is classification.
• Confirmed in November 1, 2001 Memo by
  Condoleezza Rice

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System Tools for Export Compliance Program

• Develop your own system to search and check all
  applicable databases (ITAR Munitions List, EAR
  CCL, Restricted Party Screening, Country Search,
  etc.) and create a permanent record to prove due
  diligence.
• ListVUe developed and marketed by Vanderbilt
  University.
• VISUAL COMPLIANCE developed and marketed by
  ECUSTOMS.
• Others???

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Institutions Export Compliance Function

• Where to locate?
• VP Research / Sponsored Programs?
• Institutional Compliance Office?
• Legal Affairs?
• Provost?
• Questions to ask
• -How staffed? Who funds? Who has real expertise?
  Where is greatest impact/occurrence? Where best
  to oversee the entire institution? most
  frequent export compliance problem could be in
  individual PI travel, not necessarily in
  sponsored programs?

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Non-Regulatory Pressures to Accept Troublesome
Clauses

• Quantum (bottom line amounts can be very
  enticing if large enough)
• PI pressure (no one else funds my kind of
  research)
• POLITICS - EARMARKS
• Other?
• Thanks for attending and participating!