RESTRICTIVE TROUBLESOME
CLAUSES
IMPACTING EXPORT COMPLIANCE
Various Federal Agencies
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.
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.
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.
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.
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)
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,
i. Does not have predominant civil application, and
ii. 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
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
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
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/
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.
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.
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
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.
Extract from the EARs defining
“Specific 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.
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.
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
AFMC 5352.227-9000
EXPORT-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.
AFMC 5352.227-9000
EXPORT-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)).
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 3061, 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)
APPENDIX D
ARO 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).
APPENDIX D
ARO 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 information…Approval from OASD is
required for such a release.
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.
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 nondiscrimination policies.
• If institution eventually found in violation of Export
Regulations, at a minimum significant penalties and fines.
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?
Gov’t will indicate “Although the work is R&D we do
not know what path it will take therefore in case it
develops into something non-fundamental they are
protected.
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).
FYI
DoD Funding Categories
• 6.1 Funding Basic Research
• 6.2 Funding Applied Research
• 6.3 Advanced Technology Development
• 6.4 Demonstration and Validation
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
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???
Institution’s 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?
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!”