Defense Federal Acquisition Regulation Supplement; Export-Controlled Items (DFARS Case 2004-D010), 42274-42279 [E8-16673]
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Federal Register / Vol. 73, No. 140 / Monday, July 21, 2008 / Rules and Regulations
information to certify and subsequently
verify that beneficiaries of low-income
support are qualified to receive the
support.
Need for Correction
As published, the final regulations
contain errors which may prove to be
misleading and need to be clarified.
List of Subjects in 47 CFR Part 54
Communications common carriers,
Infants and children, Reporting and
recordkeeping requirements,
Telecommunications, Telephone.
I Accordingly, 47 CFR Part 54, Subpart
E is corrected by making the following
correcting amendments:
PART 54—UNIVERSAL SERVICE FOR
LOW-INCOME CONSUMERS
1. The authority citation for part 54
continues to read as follows:
I
Authority: 47 U.S.C. 1, 4(i), 201, 205, 214
and 254 unless otherwise noted.
2. Section 54.410 is amended by
revising paragraph (b) introductory text
and (c) to read as follows:
I
§ 54.410 Certification and Verification of
Consumer Qualification for Lifeline.
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*
*
*
*
*
(b) Self-certifications. After income
certification procedures are
implemented, eligible
telecommunications carriers and
consumers are required to make certain
self-certifications, under penalty of
perjury, relating to the Lifeline program.
Eligible telecommunications carriers
must retain records of their selfcertifications and those made by
consumers.
*
*
*
*
*
(c) Verification of Continued
Eligibility. Consumers qualifying for
Lifeline may be required to verify
continued eligibility on an annual basis.
(1) By one year from the effective date
of these rules, eligible
telecommunications carriers in states
that mandate state Lifeline support must
comply with state verification
procedures to validate consumers’
continued eligibility for Lifeline. The
eligible telecommunications carrier
must be able to document that it is
complying with state regulations and
verification requirements.
(2) By one year from the effective date
of these rules, eligible
telecommunications carriers in states
that do not mandate state Lifeline
support must implement procedures to
verify annually the continued eligibility
of a statistically valid random sample of
their Lifeline subscribers. Eligible
telecommunications carriers may verify
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directly with a state that particular
subscribers continue to be eligible by
virtue of participation in a qualifying
program or income level. To the extent
eligible telecommunications carriers
cannot obtain the necessary information
from the state, they may survey
subscribers directly and provide the
results of the sample to the
Administrator. Subscribers who are
subject to this verification and qualify
under program-based eligibility criteria
must prove their continued eligibility by
presenting in person or sending a copy
of their Lifeline-qualifying public
assistance card and self-certifying,
under penalty of perjury, that they
continue to participate in the Lifelinequalifying public assistance program.
Subscribers who are subject to this
verification and qualify under the
income-based eligibility criteria must
prove their continued eligibility by
presenting current income
documentation consistent with the
income-certification process in
§ 54.410(a)(2). These subscribers must
also self-certify, under penalty of
perjury, the number of individuals in
their household and that the
documentation presented accurately
represents their annual household
income. An officer of the eligible
telecommunications carrier must certify,
under penalty of perjury, that the
company has income verification
procedures in place and that, to the best
of his or her knowledge, the company
was presented with corroborating
documentation. The eligible
telecommunications carrier must retain
records of these certifications.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E8–16608 Filed 7–18–08; 8:45 am]
BILLING CODE 6712–01–P
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations
System
48 CFR Parts 204, 235, and 252
RIN 0750–AF13
Defense Federal Acquisition
Regulation Supplement; ExportControlled Items (DFARS Case 2004–
D010)
Defense Acquisition
Regulations System, Department of
Defense (DoD).
ACTION: Interim rule with request for
comments.
AGENCY:
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SUMMARY: DoD has issued an interim
rule amending the Defense Federal
Acquisition Regulation Supplement
(DFARS) to address requirements for
complying with export control laws and
regulations when performing DoD
contracts. The rule recognizes contractor
responsibilities to comply with existing
Department of Commerce and
Department of State regulations. The
rule adds two new clauses to be used
when export-controlled items, including
information or technology, are expected
to be involved in the performance of a
contract, or when there is a possibility
that export-controlled items, including
information or technology, may come to
be involved during the period of
performance of the contract.
DATES: Effective date: July 21, 2008.
Comment date: Comments on the
interim rule should be submitted in
writing to the address shown below on
or before September 19, 2008, to be
considered in the formation of the final
rule.
ADDRESSES: You may submit comments,
identified by DFARS Case 2004–D010,
using any of the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: dfars@osd.mil. Include
DFARS Case 2004–D010 in the subject
line of the message.
• Fax: 703–602–7887.
• Mail: Defense Acquisition
Regulations System, Attn: Ms. Felisha
Hitt, OUSD (AT&L) DPAP (DARS), IMD
3D139, 3062 Defense Pentagon,
Washington, DC 20301–3062.
• Hand Delivery/Courier: Defense
Acquisition Regulations System, Crystal
Square 4, Suite 200A, 241 18th Street,
Arlington, VA 22202–3402.
Comments received generally will be
posted without change to https://
www.regulations.gov, including any
personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms.
Felisha Hitt, 703–602–0310.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published a proposed rule at 70
FR 39976 on July 12, 2005, to address
requirements for preventing
unauthorized disclosure of exportcontrolled information and technology
under DoD contracts. In consideration of
the public comments received, DoD
published a second proposed rule at 71
FR 46434 on August 14, 2006. The
second proposed rule simplified the
policy framework in recognition of
existing policy found in the
International Traffic in Arms
Regulations (ITAR) and the Export
Administration Regulations (EAR).
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Federal Register / Vol. 73, No. 140 / Monday, July 21, 2008 / Rules and Regulations
Section 890(a) of the National Defense
Authorization Act for Fiscal Year 2008
(Pub. L. 110–181), enacted on January
28, 2008, requires DoD to prescribe
regulations, not later than July 26, 2008,
to address requirements for DoD
contractors to comply with laws and
regulations applicable to goods or
technology subject to export controls. In
view of this new statutory requirement,
and in consideration of the public
comments received in response to the
second proposed rule, DoD has
developed an interim rule to address
export controls. The differences
between the second proposed rule and
this interim rule include—
• Definition and use of the term
‘‘export-controlled items’’ instead of
‘‘export-controlled information and
technology,’’ to more appropriately
describe what is controlled by the ITAR
and EAR and addressed by this rule.
• Information in the definition of
‘‘items’’ with respect to the EAR to
clarify that access to an ‘‘exportcontrolled item’’ is not necessarily
subject to the EAR. Only technology and
software source code (and not
commodities) are subject to the EAR
when released to a foreign national
inside the United States.
• Relocation of the definition of
‘‘fundamental research’’ to DFARS
204.7301, because the proposed clause
containing the definition has been
excluded from the interim rule.
• Addition of a definition of ‘‘applied
research’’ in DFARS 204.7301, since the
term is used within the definition of
‘‘fundamental research’’ in that section.
The definition of ‘‘applied research’’ is
consistent with the one found at FAR
35.001. Although the term ‘‘basic
research’’ is also used within the
definition of ‘‘fundamental research,’’ a
definition of that term is not included
in 204.7301, since the term is defined in
FAR 2.101 for general use throughout
the FAR system.
• Addition of references to the ITAR
and the EAR in 204.7302 for clarity.
• Relocation of procedural
requirements, formerly in 204.7303,
Policy, to a new Procedures section at
204.7304.
• Clarification of the clause
prescription at 204.7305(a) (formerly
204.7304(a)).
• Reduction of the number of contract
clauses from three to two by eliminating
the separate clause for fundamental
research contracts.
• Addition of text in the clause at
252.204–7009, Requirements Regarding
Potential Access to Export-Controlled
Items, to specify that, if during
performance of the contract, the
contractor becomes aware and notifies
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the contracting officer that the
contractor will generate or need access
to export-controlled items, the
contracting officer may, as one of three
possible courses of action, terminate the
contract in whole or in part for the
convenience of the Government.
DoD received comments from 167
persons or organizations in response to
the second proposed rule. The
comments are grouped into the
following seven categories:
1. National policy concerns.
2. Concerns with the scope or text of
the rule.
3. Requirement that the contract
clause include a list of specific
information and/or technology subject
to export controls.
4. Ability of DoD to identify exportcontrolled information and technology.
5. Flow-down of export control
clauses to subcontracts.
6. Termination for convenience.
7. Reasonable limits on identifying
foreign persons.
The following is a discussion of the
comments and the changes included in
this interim rule as a result of those
comments:
1. National Policy Concerns
a. Comment: Many individual citizens
were concerned about foreign access to
classified information.
DoD Response: It is important to
understand that this DFARS rule is
intended to reinforce the statutory and
regulatory requirements that must be in
place prior to foreign national access to
any export-controlled items, including
information or technology, whether
classified or not. Access to classified
information or technology is subject to
additional requirements. The second
proposed rule and this interim rule do
not permit foreign students or workers
access to classified information. To the
contrary, this interim rule reminds
universities and companies of their
responsibility to comply with export
control laws and regulations. It also
directs contracting officers to include
clauses in solicitations and contracts, as
appropriate, to clearly inform
contractors of their responsibilities
when export-controlled items are
expected to be or may be involved in the
performance of the contract.
b. Comment: Thirty-eight respondents
voiced concern regarding the loss of jobs
for U.S. citizens to foreign workers and
graduate students.
DoD Response: The DFARS rule
neither encourages nor endorses the use
of foreign workers or students. One
purpose of the rule is to ensure that
appropriate contracts include a clause
that informs contractors that export-
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controlled items are expected to be
involved in the performance of their
contracts and to remind them of their
separate responsibility to comply with
export control laws and regulations.
c. Comment: Eleven respondents
expressed concern regarding the
security risks of outsourcing jobs or
using foreign students for DoD research.
DoD Response: This DFARS rule
should have the effect of reducing the
risk of unauthorized access to exportcontrolled information or technology
under DoD contracts. The rule requires
DoD to inform contractors if exportcontrolled items are expected to be
involved in contract performance, and
to remind contractors of their
responsibility to comply with export
control laws and regulations.
d. Comment: Comments received from
universities and their associations stated
that the rule conflicts with National
Security Decision Directive (NSDD) 189,
because fundamental research is
shielded from export control laws.
Twenty-one respondents wanted DoD to
ensure that no restrictions would apply
to fundamental research.
DoD Response: This DFARS rule is
consistent with existing laws, Executive
orders, and regulations. NSDD 189
provides an exception to its own
applicability when the directive
conflicts with applicable statutes. NSDD
189 states, ‘‘No restrictions may be
placed upon the conduct or reporting of
federally-funded fundamental research
that has not received national security
classification, except as provided in
applicable U.S. Statutes.’’ Export control
laws are applicable statutes. It should
also be noted that fundamental research,
as defined by NSDD 189, does not
involve ‘‘proprietary research * * *,
industrial development, design,
production, and product utilization, the
results of which ordinarily are restricted
for proprietary or national security
reasons.’’ Most DoD contracts awarded
for conducting fundamental research do
not involve export-controlled
information or technology. However,
there are rare instances in which exportcontrolled information or technology
may be used to conduct fundamental
research. In such cases, the entity must
be in compliance with the applicable
export control laws and regulations.
Also, there is a borderline where
fundamental research meets more
advanced applied research and
development. One purpose of the
DFARS rule is to remind universities
that they must notify the contracting
officer when they have reason to believe
this line may be crossed.
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e. Comment: Twenty-six respondents
stated that hiring competent U.S.
workers reduces security risk.
DoD Response: The DFARS rule does
not address the impact of workforce
competency on security. Therefore, this
comment does not affect the content of
the rule.
f. Comment: Many respondents
commented on issues associated with
foreign workers. These included
concerns about the H–1b visa process;
willingness of foreign workers to accept
lower wages; increasing dependence on
foreign researchers undermining the
future U.S. science and engineering
base; the need for immigration law
reform; relaxing security requirements
for foreign students; minority citizen
unemployment; and weak academic
credentials of some foreign students.
DoD Response: These comments are
not applicable to this DFARS rule. The
DFARS rule directs contracting officers
to inform contractors when they know,
based on input from the requiring
activity, that export-controlled items are
expected to be involved in the
performance of a DoD contract, and to
remind DoD contractors of their
responsibility to comply with export
control laws and regulations.
g. Comment: Several respondents
commented on the administrative cost
or cost-effectiveness of complying with
export control laws and regulations.
Twenty of these comments dealt with
specific steps associated with
compliance. Seven responses contained
reminders that key technologies and/or
national security data must be
safeguarded regardless of the cost.
DoD Response: These comments are
not applicable to this DFARS rule.
While the cost of compliance with
export control laws and regulations may
be relatively small or large, this DFARS
rule does not add to or subtract from
that cost. All U.S. persons are
responsible for complying with export
control laws and regulations (which
were not created or augmented by this
rule), and this rule does not exempt
anyone from that responsibility.
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2. Concerns With the Scope or Text of
the Rule
a. Comment: Twenty-five respondents
from the university community
expressed concern that the second
proposed rule was still too broad or that
it went beyond reminding contractors of
their separate EAR and ITAR
responsibilities. Seemingly related
comments from some of the same
respondents added that DoD should
leave the subject to the Department of
State and the Department of Commerce.
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DoD Response: DoD does not believe
that the DFARS rule goes beyond
reminding contractors of their
responsibilities. The rule requires
contracting officers to include an
appropriate clause in solicitations and
contracts if export-controlled items are
expected to be involved in contract
performance, as determined by the
requiring activity. This is the method for
‘‘reminding’’ contractors, i.e., getting the
required information into solicitations
and contracts. The clause language
clearly directs contractors to the ITAR
and the EAR, and to the Department of
State and the Department of Commerce
for answers to questions about ITAR and
EAR requirements. DoD relies on the
Departments of State and Commerce to
administer their export control
programs.
b. Comment: Twenty-six respondents
stated that fundamental research cannot
generate controlled information or
technology.
DoD Response: DoD disagrees with
this comment, because there are
situations in which export controls may
affect the conduct of fundamental
research:
(1) Although fundamental research
cannot by definition result in exportcontrolled information, fundamental
research can evolve into more advanced
applied research. At this transition
point, the research may involve exportcontrolled information or technology.
The instances when this happens
midway through a research contract
may be rare. However, almost all
applied research is an outgrowth of
work that began as fundamental
research. There is a point at which
certain research projects become
specific enough to involve exportcontrolled information or technology.
To maintain national security, DoD and
its contractors must be mindful of their
responsibility to identify that crossover
point.
(2) When export-controlled
information or technology is used to
conduct fundamental research.
(3) When the distribution of the
results of fundamental research is
restricted due to proprietary reasons or
if the research has received national
security classification (see EAR section
734.8).
c. Comment: Nineteen respondents
requested clarification of the proposed
clause at 252.204–70XX, Requirements
for Contracts Involving ExportControlled Information or Technology.
Some respondents questioned if all
technology must be identified, even if
applicable licensing permitted its use.
Other respondents requested guidance
for situations where exclusions for other
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than fundamental research exist, such as
those for published materials or bona
fide employees.
DoD Response: Export-controlled
items, including information and
technology, remain controlled under
applicable statutes even if an exemption
applies in a particular situation. Neither
the prescriptive language of the DFARS
rule, nor the clauses prescribed for use,
are the appropriate place for guidance or
information regarding exemptions. Note
that the DFARS rule does not include
the requirement that specific exportcontrolled information or technology be
identified in the contract clause. (See
the DoD Response to the Comment in
section 3 of this discussion.)
d. Comment: Several respondents
stated that the structure of the clauses
is more complex than necessary. They
recommended two clauses instead of
three.
DoD Response: The interim rule
reduces the number of clauses from
three to two.
3. Requirement That the Contract
Clause Include a List of Specific
Information and/or Technology Subject
to Export Controls
Comment: One respondent objected to
the requirement in the proposed clause
at 252.204–70XX, for a list of the
specific export-controlled information
and/or technology, which the parties are
to keep current during the period of
contract performance. The respondent
recommended elimination of this
requirement, because it is unnecessary
and would create the possibility of a
contractor being in breach of the clause
due to inadvertent errors in the list,
even if the contractor has an adequate
export control system.
DoD Response: DoD considered the
requirement and concluded that a
different approach would better achieve
the intended purpose while being less
burdensome. A DoD Inspector General
report on this subject (D–2004–061)
stressed the importance of identifying
export-controlled information and
technology in DoD contracts to ensure
the awareness necessary to prevent
unauthorized disclosure. A key message
in the DoD Inspector General report was
that there is an inadequate
understanding of export control
requirements among some in the
contractor community, and inadequate
attention paid to the effect export
controls have on the performance of
DoD contracts. Identifying the exportcontrolled information and technology
involved in the performance of the
contract was intended to ensure that
inexperienced contractors understand
what must be controlled, and that
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experienced contractors and their
Government counterparts share a
common understanding of the exportcontrolled information and technology
involved in the contractor’s proposed
approach to satisfying contract
requirements. Mindful of this
underlying intent, and considering the
merits of the public comments, DoD
considered an alternative that would
achieve the intended result. That
alternative was to require the clause to
identify the category(ies) of exportcontrolled information and/or
technology (rather than the specific
export-controlled information and/or
technology) expected to be involved in
performance of the contract. This
alternative proved unacceptable,
however, to the agencies of the Federal
Government responsible for enforcing
export control laws and regulations.
From their point of view, it is important
that any contract clause be free of
information that could possibly create
ambiguity about the contractor’s
responsibility to comply with export
control laws and regulations. As a
result, the DFARS rule will cause
requiring activities, contracting officers,
offerors, and contractors to be aware
that export-controlled items, including
information and technology, are
expected to be involved in performance
of the contract, but it will not require
identification of the export-controlled
items. The contractor’s responsibility to
comply with all applicable laws and
regulations regarding export-controlled
items exists independent of, and is not
established or limited by, the
information provided in the rule or the
prescribed contract clauses.
4. Ability of DoD To Identify ExportControlled Information and Technology
Comment: Several respondents stated
that DoD contracting officers are not
qualified to identify controlled
information and technology, nor do they
know when exclusions and exemptions
from licensing requirements apply.
DoD Response: DoD agrees that this is
not an area in which DoD contracting
officers are expected to have expertise.
The DFARS rule does not require
contracting officers to identify specific
export control classifications or
categories for the information or
technology involved. Moreover, the
DFARS rule notes that the agencies
responsible for the ITAR and EAR have
responsibility for providing
authoritative guidance on such matters.
The DFARS rule assigns to the requiring
activity the responsibility for
determining whether export-controlled
items are expected to be involved in
performance of a contemplated contract.
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Requiring activity personnel are
responsible for determining if a research
proposal merits funding and whether
the Government receives adequate value
for services performed. Training for
such requiring activity personnel (and
contracting officers) is presently
available through the Defense
Acquisition University. This training is
being supplemented to make it more
suitable for personnel responsible for
implementing this DFARS rule and to
keep the information current and share
lessons learned.
5. Flow-Down of Export Control Clauses
to Subcontracts
Comment: Several respondents stated
that the flow-down of any exportcontrol related clauses is problematic
for universities. Commercial entities
may not be aware of NSDD 189 and
fundamental research. Overuse of the
clause when unnecessary could harm
the university-industry-government
research partnership.
DoD Response: The clause in the
interim rule at DFARS 252.204–7008,
Requirements for Contracts Involving
Export-Controlled Items, requires flowdown only to subcontracts that are
expected to involve access to or
generation of export-controlled items.
The clause in the interim rule at
252.204–7009, Requirements Regarding
Potential Access to Export-Controlled
Items, must be used when the parties do
not anticipate that the contractor will
generate or need access to exportcontrolled items and does not include a
flow-down requirement.
6. Termination for Convenience
Comment: One respondent requested
that termination for convenience be
allowed for those projects that begin as
fundamental research but later develop
export control issues.
DoD Response: The clause in the
interim rule at 252.204–7009,
Requirements Regarding Potential
Access to Export-Controlled Items,
addresses this issue. Paragraph (c) of the
clause states that if, during performance
of the contract, the contractor notifies
the contracting officer that the
contractor will generate or need access
to export-controlled items, the
contracting officer may, as one of three
possible courses of action, terminate the
contract in whole or in part for the
convenience of the Government in
accordance with the Termination clause
of the contract.
7. Reasonable Limits on Identifying
Foreign Persons
Comment: One respondent
commented that DoD should place
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42277
limits on identifying foreign persons
and should avoid unnecessarily broad
reviews of individuals working on
subcontracted research efforts at
universities.
DoD Response: The comment is not
relevant to this DFARS rule. The rule
does not address requirements for
identification of foreign persons.
This rule was not subject to Office of
Management and Budget review under
Executive Order 12866, dated
September 30, 1993.
B. Regulatory Flexibility Act
DoD does not expect this rule to have
a significant economic impact on a
substantial number of small entities
within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq.,
because all contractors, including small
entities, are already subject to exportcontrol laws and regulations. The
requirements of this rule reinforce
existing responsibilities. Therefore, DoD
has not performed an initial regulatory
flexibility analysis. DoD invites
comments from small businesses and
other interested parties. DoD also will
consider comments from small entities
concerning the affected DFARS subparts
in accordance with 5 U.S.C. 610. Such
comments should be submitted
separately and should cite DFARS Case
2004–D010.
C. Paperwork Reduction Act
The Paperwork Reduction Act does
not apply, because the rule does not
impose any information collection
requirements that require the approval
of the Office of Management and Budget
under 44 U.S.C. 3501, et seq.
D. Determination To Issue an Interim
Rule
A determination has been made under
the authority of the Secretary of Defense
that urgent and compelling reasons exist
to publish an interim rule prior to
affording the public an opportunity to
comment. This interim rule implements
Section 890(a) of the National Defense
Authorization Act for Fiscal Year 2008
(Pub. L. 110–181). Section 890(a)
requires DoD to prescribe regulations,
not later than July 26, 2008, requiring
DoD contractors providing goods or
technology subject to export controls
under the Arms Export Control Act or
the Export Administration Act of 1979
to comply with those Acts and
applicable regulations, including the
International Traffic in Arms
Regulations and the Export
Administration Regulations. Comments
received in response to this interim rule
will be considered in the formation of
the final rule.
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204.7302
List of Subjects in 48 CFR Parts 204,
235, and 252
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations
System.
Therefore, 48 CFR parts 204, 235, and
252 are amended as follows:
I 1. The authority citation for 48 CFR
parts 204, 235, and 252 continues to
read as follows:
I
Authority: 41 U.S.C. 421 and 48 CFR
Chapter 1.
PART 204—ADMINISTRATIVE
MATTERS
2. Subpart 204.73 is added to read as
follows:
I
Subpart 204.73—Export-Controlled Items
Sec.
204.7300 Scope of subpart.
204.7301 Definitions.
204.7302 General.
204.7303 Policy.
204.7304 Procedures.
204.7305 Contract clauses.
Subpart 204.73—Export-Controlled
Items
204.7300
Scope of subpart.
This subpart implements Section
890(a) of the National Defense
Authorization Act for Fiscal Year 2008
(Pub. L. 110–181).
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204.7301
Definitions.
As used in this subpart—
Applied research means the effort
that—
(1) Normally follows basic research,
but may not be severable from the
related basic research;
(2) Attempts to determine and exploit
the potential of scientific discoveries or
improvements in technology, materials,
processes, methods, devices, or
techniques; and
(3) Attempts to advance the state of
the art.
Export-controlled items is defined in
the clauses at 252.204–7008 and
252.204–7009.
Fundamental research, as defined by
National Security Decision Directive
(NSDD) 189, means basic and applied
research in science and engineering, the
results of which ordinarily are
published and shared broadly within
the scientific community. This is
distinguished from proprietary research
and from industrial development,
design, production, and product
utilization, the results of which
ordinarily are restricted for proprietary
or national security reasons.
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General.
Export control laws and regulations
restrict the transfer, by any means, of
certain types of items to unauthorized
persons. The International Traffic in
Arms Regulations (ITAR) and the Export
Administration Regulations (EAR)
establish these restrictions. See PGI
204.7302 for additional information.
204.7303
Policy.
(a) It is in the interest of both the
Government and the contractor to have
a common understanding of exportcontrolled items expected to be
involved in contract performance.
(b) The requiring activity shall review
each acquisition to determine if, during
performance of the contemplated
contract, the contractor is expected to
generate or require access to exportcontrolled items.
204.7304
Contract clauses.
(a) Use the clause at 252.204–7008,
Requirements for Contracts Involving
Export-Controlled Items, in solicitations
and contracts when the requiring
activity provides the notification at
204.7304(a)(1) or (b)(1), indicating that
export-controlled items are expected to
be involved in the performance of the
contract.
(b) Use the clause at 252.204–7009,
Requirements Regarding Potential
Access to Export-Controlled Items, in
solicitations and contracts—
(1) For research and development,
except when the clause at 252.204–7008
will be included; or
(2) For supplies and services, when
the requiring activity provides the
notification at 204.7304(b)(2).
PO 00000
Frm 00022
Fmt 4700
Sfmt 4700
235.071
[Redesignated]
3. Section 235.071 is redesignated as
section 235.072.
I 4. A new section 235.071 is added to
read as follows:
I
235.071
Export-controlled items.
For requirements regarding access to
export-controlled items, see Subpart
204.73.
PART 252—SOLICITATION
PROVISIONS AND CONTRACT
CLAUSES
5. Sections 252.204–7008 and
252.204–7009 are added to read as
follows:
I
252.204–7008 Requirements for contracts
involving export-controlled items.
As prescribed in 204.7305(a), use the
following clause:
Procedures.
(a) Prior to issuance of a solicitation
for research and development, the
requiring activity shall notify the
contracting officer in writing when—
(1) Export-controlled items are
expected to be involved; or
(2) The work is fundamental research
only, and export-controlled items are
not expected to be involved.
(b) Prior to issuance of a solicitation
for supplies or services, the requiring
activity shall notify the contracting
officer in writing when—
(1) Export-controlled items are
expected to be involved; or
(2) The requiring activity is unable to
determine that export-controlled items
will not be involved. See PGI 204.7304
for guidance regarding this notification
requirement.
204.7305
PART 235—RESEARCH AND
DEVELOPMENT CONTRACTING
Requirements for Contracts Involving
Export-Controlled Items (Jul 2008)
(a) Definition. Export-controlled items, as
used in this clause, means items subject to
the Export Administration Regulations (EAR)
(15 CFR Parts 730–774) or the International
Traffic in Arms Regulations (22 CFR Parts
120–130). The term includes:
(1) Defense items, defined in the Arms
Export Control Act, 22 U.S.C. 2778(j)(4)(A),
as defense articles, defense services, and
related technical data. The term ‘‘defense
items’’ includes information and technology.
(2) Items, defined in the EAR as
‘‘commodities, software, and technology,’’
terms that are also defined in the EAR, 15
CFR 772.1. Regarding the release of items
subject to the EAR to foreign nationals within
the United States, ‘‘items’’ only include
technology and software source code (and
not commodities) subject to the EAR.
(b) The parties anticipate that, in the
performance of this contract, the Contractor
will generate or need access to exportcontrolled items.
(c) The Contractor shall comply with all
applicable laws and regulations regarding
export-controlled items, including the
requirement for contractors to register with
the Department of State in accordance with
the ITAR. The Contractor shall consult with
the Department of State regarding any
questions relating to the ITAR and with the
Department of Commerce regarding any
questions relating to the EAR.
(d) The Contractor’s responsibility to
comply with all applicable laws and
regulations regarding export-controlled items
exists independent of, and is not established
or limited by, the information provided by
this clause.
(e) Nothing in the terms of this contract is
intended to change, supersede, or waive any
of the requirements of applicable Federal
laws, Executive orders, and regulations,
including but not limited to—
(1) The Export Administration Act of 1979,
as amended (50 U.S.C. App. 2401–2420);
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21JYR1
Federal Register / Vol. 73, No. 140 / Monday, July 21, 2008 / Rules and Regulations
(2) The Arms Export Control Act of 1976
(22 U.S.C. 2751 et seq.);
(3) The International Emergency Economic
Powers Act (50 U.S.C. 1701–1707);
(4) The Export Administration Regulations
(15 CFR Parts 730–774);
(5) The International Traffic in Arms
Regulations (22 CFR Parts 120–130);
(6) Executive Order 13222, as extended;
(7) DoD Directive 2040.2, International
Transfers of Technology, Goods, Services,
and Munitions; and
(8) DoD Industrial Security Regulation
(DoD 5220.22–R).
(f) The Contractor shall include the
substance of this clause, including this
paragraph (f), in all subcontracts that are
expected to involve access to or generation of
export-controlled items.
(End of clause)
252.235–7002, 252.235–7003, 252.235–
7010, and 252.235–7011 [Amended]
I 6. Sections 252.235–7002, 252.235–
7003, 252.235–7010, and 252.235–7011
are amended in the introductory text by
removing ‘‘235.071’’ and adding in its
place ‘‘235.072’’.
[FR Doc. E8–16673 Filed 7–18–08; 8:45 am]
BILLING CODE 5001–08–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 13
RIN 1018–AV63
252.204–7009 Requirements regarding
potential access to export-controlled items.
As prescribed in 204.7305(b), use the
following clause:
Migratory Bird Permits; Addresses for
Applications for Eagle and Migratory
Bird Permit Applications
AGENCY:
yshivers on PROD1PC62 with RULES
Requirements Regarding Potential Access to
Export-Controlled Items (Jul 2008)
(a) Definition. Export-controlled items, as
used in this clause, means items subject to
the Export Administration Regulations (EAR)
(15 CFR Parts 730–774) or the International
Traffic in Arms Regulations (22 CFR Parts
120–130). The term includes:
(1) Defense items, defined in the Arms
Export Control Act, 22 U.S.C. 2778(j)(4)(A),
as defense articles, defense services, and
related technical data. The term ‘‘defense
items’’ includes information and technology.
(2) Items, defined in the EAR as
‘‘commodities, software, and technology,’’
terms that are also defined in the EAR, 15
CFR 772.1. Regarding the release of items
subject to the EAR to foreign nationals within
the United States, ‘‘items’’ only include
technology and software source code (and
not commodities) subject to the EAR.
(b) The parties do not anticipate that, in the
performance of this contract, the Contractor
will generate or need access to exportcontrolled items.
(c) If, during the performance of this
contract, the Contractor becomes aware that
the Contractor will generate or need access to
export-controlled items—
(1) The Contractor shall notify the
Contracting Officer in writing; and
(2) The Contracting Officer will
expeditiously—
(i) Modify the contract to include the
Defense Federal Acquisition Regulation
Supplement clause 252.204–7008,
Requirements for Contracts Involving ExportControlled Items;
(ii) Negotiate a contract modification that
eliminates the requirement for performance
of work that would involve export-controlled
items; or
(iii) Terminate the contract, in whole or in
part, as may be appropriate, for the
convenience of the Government, in
accordance with the Termination clause of
the contract.
(End of clause)
VerDate Aug<31>2005
15:43 Jul 18, 2008
Jkt 214001
Fish and Wildlife Service,
Interior.
ACTION: Final rule.
SUMMARY: We correct omissions in our
list of addresses the public can use to
submit permit applications to conduct
activities with migratory birds or with
bald eagles or golden eagles.
DATES: This rule is effective on July 21,
2008.
FOR FURTHER INFORMATION CONTACT: Dr.
George T. Allen, Wildlife Biologist,
Division of Migratory Bird Management,
U.S. Fish and Wildlife Service, 703–
358–1825.
SUPPLEMENTARY INFORMATION:
Background
We are the Federal agency delegated
the primary responsibility for managing
migratory birds, as authorized by the
Migratory Bird Treaty Act (MBTA) (16
U.S.C. 703 et seq.), which implements
conventions with Great Britain (for
Canada), Mexico, Japan, and the Soviet
Union (Russia).
We correct omissions of States,
territories, and possessions in 50 CFR
13.11(b)(5), in which we have listed
addresses for the public to use to submit
permit applications to conduct activities
with migratory birds or with bald eagles
or golden eagles.
Section 553 of the Administrative
Procedure Act, 5 U.S.C. 553(b)(B),
provides that, when an agency for good
cause finds that notice and public
procedure are impracticable,
unnecessary, or contrary to the public
interest, an agency may issue a rule
without providing notice and an
opportunity for public comment. We
have determined that there is good
cause for making today’s rule final
without prior proposal and opportunity
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
42279
for comment because we are merely
making administrative corrections to
omissions in the lists of States,
territories, and possessions we include
in our regulations with our addresses for
the public to use to request or submit
permit applications for activities with
bald or golden eagles or migratory birds.
Further, it is in the public’s best interest
to have access to these corrected lists as
soon as possible. Thus, notice and
public procedure are unnecessary. We
find that this constitutes good cause
under 5 U.S.C. 553(b)(B). Moreover,
since today’s action does not create any
new regulatory requirements, we find
that good cause exists to provide for an
immediate effective date pursuant to 5
U.S.C. 553(d)(3).
Required Determinations
Regulatory Planning and Review
In accordance with the criteria in E.O.
12866, this rule is not a significant
regulatory action. The Office of
Management and Budget makes the final
determination of significance under E.O.
12866.
a. This rule does not have an annual
economic effect of $100 million or more,
or adversely affect an economic sector,
productivity, jobs, the environment, or
other units of government. A costbenefit and economic analysis thus is
not required. There are no costs
associated with this rule.
b. This rule does not create
inconsistencies with other agencies’
actions. The rule deals solely with
governance of migratory bird permitting
in the United States. No other Federal
agency has any role in regulating
activities with migratory birds.
c. This rule does not materially affect
entitlements, grants, user fees, loan
programs, or the rights and obligations
of their recipients. There are no
entitlements, grants, user fees, or loan
programs associated with the regulation
of migratory birds.
d. This rule does not raise novel legal
or policy issues. The regulations change
is in compliance with other laws,
policies, and regulations.
Regulatory Flexibility Act (5 U.S.C. 601
et seq.)
Under the Regulatory Flexibility Act
(5 U.S.C. 601 et seq., as amended by the
Small Business Regulatory Enforcement
Fairness Act (SBREFA) of 1996 (Pub. L.
104–121)), whenever an agency is
required to publish a notice of
rulemaking for any proposed or final
rule, it must prepare and make available
for public comment a regulatory
flexibility analysis that describes the
effect of the rule on small entities (i.e.,
E:\FR\FM\21JYR1.SGM
21JYR1
]]>Agencies
[Federal Register Volume 73, Number 140 (Monday, July 21, 2008)]
[Rules and Regulations]
[Pages 42274-42279]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-16673]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Defense Acquisition Regulations System
48 CFR Parts 204, 235, and 252
RIN 0750-AF13
Defense Federal Acquisition Regulation Supplement; Export-
Controlled Items (DFARS Case 2004-D010)
AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).
ACTION: Interim rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: DoD has issued an interim rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to address requirements for
complying with export control laws and regulations when performing DoD
contracts. The rule recognizes contractor responsibilities to comply
with existing Department of Commerce and Department of State
regulations. The rule adds two new clauses to be used when export-
controlled items, including information or technology, are expected to
be involved in the performance of a contract, or when there is a
possibility that export-controlled items, including information or
technology, may come to be involved during the period of performance of
the contract.
DATES: Effective date: July 21, 2008.
Comment date: Comments on the interim rule should be submitted in
writing to the address shown below on or before September 19, 2008, to
be considered in the formation of the final rule.
ADDRESSES: You may submit comments, identified by DFARS Case 2004-D010,
using any of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: dfars@osd.mil. Include DFARS Case 2004-D010 in the
subject line of the message.
Fax: 703-602-7887.
Mail: Defense Acquisition Regulations System, Attn: Ms.
Felisha Hitt, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense
Pentagon, Washington, DC 20301-3062.
Hand Delivery/Courier: Defense Acquisition Regulations
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA
22202-3402.
Comments received generally will be posted without change to http:/
/www.regulations.gov, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Ms. Felisha Hitt, 703-602-0310.
SUPPLEMENTARY INFORMATION:
A. Background
DoD published a proposed rule at 70 FR 39976 on July 12, 2005, to
address requirements for preventing unauthorized disclosure of export-
controlled information and technology under DoD contracts. In
consideration of the public comments received, DoD published a second
proposed rule at 71 FR 46434 on August 14, 2006. The second proposed
rule simplified the policy framework in recognition of existing policy
found in the International Traffic in Arms Regulations (ITAR) and the
Export Administration Regulations (EAR).
[[Page 42275]]
Section 890(a) of the National Defense Authorization Act for Fiscal
Year 2008 (Pub. L. 110-181), enacted on January 28, 2008, requires DoD
to prescribe regulations, not later than July 26, 2008, to address
requirements for DoD contractors to comply with laws and regulations
applicable to goods or technology subject to export controls. In view
of this new statutory requirement, and in consideration of the public
comments received in response to the second proposed rule, DoD has
developed an interim rule to address export controls. The differences
between the second proposed rule and this interim rule include--
Definition and use of the term ``export-controlled items''
instead of ``export-controlled information and technology,'' to more
appropriately describe what is controlled by the ITAR and EAR and
addressed by this rule.
Information in the definition of ``items'' with respect to
the EAR to clarify that access to an ``export-controlled item'' is not
necessarily subject to the EAR. Only technology and software source
code (and not commodities) are subject to the EAR when released to a
foreign national inside the United States.
Relocation of the definition of ``fundamental research''
to DFARS 204.7301, because the proposed clause containing the
definition has been excluded from the interim rule.
Addition of a definition of ``applied research'' in DFARS
204.7301, since the term is used within the definition of ``fundamental
research'' in that section. The definition of ``applied research'' is
consistent with the one found at FAR 35.001. Although the term ``basic
research'' is also used within the definition of ``fundamental
research,'' a definition of that term is not included in 204.7301,
since the term is defined in FAR 2.101 for general use throughout the
FAR system.
Addition of references to the ITAR and the EAR in 204.7302
for clarity.
Relocation of procedural requirements, formerly in
204.7303, Policy, to a new Procedures section at 204.7304.
Clarification of the clause prescription at 204.7305(a)
(formerly 204.7304(a)).
Reduction of the number of contract clauses from three to
two by eliminating the separate clause for fundamental research
contracts.
Addition of text in the clause at 252.204-7009,
Requirements Regarding Potential Access to Export-Controlled Items, to
specify that, if during performance of the contract, the contractor
becomes aware and notifies the contracting officer that the contractor
will generate or need access to export-controlled items, the
contracting officer may, as one of three possible courses of action,
terminate the contract in whole or in part for the convenience of the
Government.
DoD received comments from 167 persons or organizations in response
to the second proposed rule. The comments are grouped into the
following seven categories:
1. National policy concerns.
2. Concerns with the scope or text of the rule.
3. Requirement that the contract clause include a list of specific
information and/or technology subject to export controls.
4. Ability of DoD to identify export-controlled information and
technology.
5. Flow-down of export control clauses to subcontracts.
6. Termination for convenience.
7. Reasonable limits on identifying foreign persons.
The following is a discussion of the comments and the changes
included in this interim rule as a result of those comments:
1. National Policy Concerns
a. Comment: Many individual citizens were concerned about foreign
access to classified information.
DoD Response: It is important to understand that this DFARS rule is
intended to reinforce the statutory and regulatory requirements that
must be in place prior to foreign national access to any export-
controlled items, including information or technology, whether
classified or not. Access to classified information or technology is
subject to additional requirements. The second proposed rule and this
interim rule do not permit foreign students or workers access to
classified information. To the contrary, this interim rule reminds
universities and companies of their responsibility to comply with
export control laws and regulations. It also directs contracting
officers to include clauses in solicitations and contracts, as
appropriate, to clearly inform contractors of their responsibilities
when export-controlled items are expected to be or may be involved in
the performance of the contract.
b. Comment: Thirty-eight respondents voiced concern regarding the
loss of jobs for U.S. citizens to foreign workers and graduate
students.
DoD Response: The DFARS rule neither encourages nor endorses the
use of foreign workers or students. One purpose of the rule is to
ensure that appropriate contracts include a clause that informs
contractors that export-controlled items are expected to be involved in
the performance of their contracts and to remind them of their separate
responsibility to comply with export control laws and regulations.
c. Comment: Eleven respondents expressed concern regarding the
security risks of outsourcing jobs or using foreign students for DoD
research.
DoD Response: This DFARS rule should have the effect of reducing
the risk of unauthorized access to export-controlled information or
technology under DoD contracts. The rule requires DoD to inform
contractors if export-controlled items are expected to be involved in
contract performance, and to remind contractors of their responsibility
to comply with export control laws and regulations.
d. Comment: Comments received from universities and their
associations stated that the rule conflicts with National Security
Decision Directive (NSDD) 189, because fundamental research is shielded
from export control laws. Twenty-one respondents wanted DoD to ensure
that no restrictions would apply to fundamental research.
DoD Response: This DFARS rule is consistent with existing laws,
Executive orders, and regulations. NSDD 189 provides an exception to
its own applicability when the directive conflicts with applicable
statutes. NSDD 189 states, ``No restrictions may be placed upon the
conduct or reporting of federally-funded fundamental research that has
not received national security classification, except as provided in
applicable U.S. Statutes.'' Export control laws are applicable
statutes. It should also be noted that fundamental research, as defined
by NSDD 189, does not involve ``proprietary research * * *, industrial
development, design, production, and product utilization, the results
of which ordinarily are restricted for proprietary or national security
reasons.'' Most DoD contracts awarded for conducting fundamental
research do not involve export-controlled information or technology.
However, there are rare instances in which export-controlled
information or technology may be used to conduct fundamental research.
In such cases, the entity must be in compliance with the applicable
export control laws and regulations. Also, there is a borderline where
fundamental research meets more advanced applied research and
development. One purpose of the DFARS rule is to remind universities
that they must notify the contracting officer when they have reason to
believe this line may be crossed.
[[Page 42276]]
e. Comment: Twenty-six respondents stated that hiring competent
U.S. workers reduces security risk.
DoD Response: The DFARS rule does not address the impact of
workforce competency on security. Therefore, this comment does not
affect the content of the rule.
f. Comment: Many respondents commented on issues associated with
foreign workers. These included concerns about the H-1b visa process;
willingness of foreign workers to accept lower wages; increasing
dependence on foreign researchers undermining the future U.S. science
and engineering base; the need for immigration law reform; relaxing
security requirements for foreign students; minority citizen
unemployment; and weak academic credentials of some foreign students.
DoD Response: These comments are not applicable to this DFARS rule.
The DFARS rule directs contracting officers to inform contractors when
they know, based on input from the requiring activity, that export-
controlled items are expected to be involved in the performance of a
DoD contract, and to remind DoD contractors of their responsibility to
comply with export control laws and regulations.
g. Comment: Several respondents commented on the administrative
cost or cost-effectiveness of complying with export control laws and
regulations. Twenty of these comments dealt with specific steps
associated with compliance. Seven responses contained reminders that
key technologies and/or national security data must be safeguarded
regardless of the cost.
DoD Response: These comments are not applicable to this DFARS rule.
While the cost of compliance with export control laws and regulations
may be relatively small or large, this DFARS rule does not add to or
subtract from that cost. All U.S. persons are responsible for complying
with export control laws and regulations (which were not created or
augmented by this rule), and this rule does not exempt anyone from that
responsibility.
2. Concerns With the Scope or Text of the Rule
a. Comment: Twenty-five respondents from the university community
expressed concern that the second proposed rule was still too broad or
that it went beyond reminding contractors of their separate EAR and
ITAR responsibilities. Seemingly related comments from some of the same
respondents added that DoD should leave the subject to the Department
of State and the Department of Commerce.
DoD Response: DoD does not believe that the DFARS rule goes beyond
reminding contractors of their responsibilities. The rule requires
contracting officers to include an appropriate clause in solicitations
and contracts if export-controlled items are expected to be involved in
contract performance, as determined by the requiring activity. This is
the method for ``reminding'' contractors, i.e., getting the required
information into solicitations and contracts. The clause language
clearly directs contractors to the ITAR and the EAR, and to the
Department of State and the Department of Commerce for answers to
questions about ITAR and EAR requirements. DoD relies on the
Departments of State and Commerce to administer their export control
programs.
b. Comment: Twenty-six respondents stated that fundamental research
cannot generate controlled information or technology.
DoD Response: DoD disagrees with this comment, because there are
situations in which export controls may affect the conduct of
fundamental research:
(1) Although fundamental research cannot by definition result in
export-controlled information, fundamental research can evolve into
more advanced applied research. At this transition point, the research
may involve export-controlled information or technology. The instances
when this happens midway through a research contract may be rare.
However, almost all applied research is an outgrowth of work that began
as fundamental research. There is a point at which certain research
projects become specific enough to involve export-controlled
information or technology. To maintain national security, DoD and its
contractors must be mindful of their responsibility to identify that
crossover point.
(2) When export-controlled information or technology is used to
conduct fundamental research.
(3) When the distribution of the results of fundamental research is
restricted due to proprietary reasons or if the research has received
national security classification (see EAR section 734.8).
c. Comment: Nineteen respondents requested clarification of the
proposed clause at 252.204-70XX, Requirements for Contracts Involving
Export-Controlled Information or Technology. Some respondents
questioned if all technology must be identified, even if applicable
licensing permitted its use. Other respondents requested guidance for
situations where exclusions for other than fundamental research exist,
such as those for published materials or bona fide employees.
DoD Response: Export-controlled items, including information and
technology, remain controlled under applicable statutes even if an
exemption applies in a particular situation. Neither the prescriptive
language of the DFARS rule, nor the clauses prescribed for use, are the
appropriate place for guidance or information regarding exemptions.
Note that the DFARS rule does not include the requirement that specific
export-controlled information or technology be identified in the
contract clause. (See the DoD Response to the Comment in section 3 of
this discussion.)
d. Comment: Several respondents stated that the structure of the
clauses is more complex than necessary. They recommended two clauses
instead of three.
DoD Response: The interim rule reduces the number of clauses from
three to two.
3. Requirement That the Contract Clause Include a List of Specific
Information and/or Technology Subject to Export Controls
Comment: One respondent objected to the requirement in the proposed
clause at 252.204-70XX, for a list of the specific export-controlled
information and/or technology, which the parties are to keep current
during the period of contract performance. The respondent recommended
elimination of this requirement, because it is unnecessary and would
create the possibility of a contractor being in breach of the clause
due to inadvertent errors in the list, even if the contractor has an
adequate export control system.
DoD Response: DoD considered the requirement and concluded that a
different approach would better achieve the intended purpose while
being less burdensome. A DoD Inspector General report on this subject
(D-2004-061) stressed the importance of identifying export-controlled
information and technology in DoD contracts to ensure the awareness
necessary to prevent unauthorized disclosure. A key message in the DoD
Inspector General report was that there is an inadequate understanding
of export control requirements among some in the contractor community,
and inadequate attention paid to the effect export controls have on the
performance of DoD contracts. Identifying the export-controlled
information and technology involved in the performance of the contract
was intended to ensure that inexperienced contractors understand what
must be controlled, and that
[[Page 42277]]
experienced contractors and their Government counterparts share a
common understanding of the export-controlled information and
technology involved in the contractor's proposed approach to satisfying
contract requirements. Mindful of this underlying intent, and
considering the merits of the public comments, DoD considered an
alternative that would achieve the intended result. That alternative
was to require the clause to identify the category(ies) of export-
controlled information and/or technology (rather than the specific
export-controlled information and/or technology) expected to be
involved in performance of the contract. This alternative proved
unacceptable, however, to the agencies of the Federal Government
responsible for enforcing export control laws and regulations. From
their point of view, it is important that any contract clause be free
of information that could possibly create ambiguity about the
contractor's responsibility to comply with export control laws and
regulations. As a result, the DFARS rule will cause requiring
activities, contracting officers, offerors, and contractors to be aware
that export-controlled items, including information and technology, are
expected to be involved in performance of the contract, but it will not
require identification of the export-controlled items. The contractor's
responsibility to comply with all applicable laws and regulations
regarding export-controlled items exists independent of, and is not
established or limited by, the information provided in the rule or the
prescribed contract clauses.
4. Ability of DoD To Identify Export-Controlled Information and
Technology
Comment: Several respondents stated that DoD contracting officers
are not qualified to identify controlled information and technology,
nor do they know when exclusions and exemptions from licensing
requirements apply.
DoD Response: DoD agrees that this is not an area in which DoD
contracting officers are expected to have expertise. The DFARS rule
does not require contracting officers to identify specific export
control classifications or categories for the information or technology
involved. Moreover, the DFARS rule notes that the agencies responsible
for the ITAR and EAR have responsibility for providing authoritative
guidance on such matters. The DFARS rule assigns to the requiring
activity the responsibility for determining whether export-controlled
items are expected to be involved in performance of a contemplated
contract. Requiring activity personnel are responsible for determining
if a research proposal merits funding and whether the Government
receives adequate value for services performed. Training for such
requiring activity personnel (and contracting officers) is presently
available through the Defense Acquisition University. This training is
being supplemented to make it more suitable for personnel responsible
for implementing this DFARS rule and to keep the information current
and share lessons learned.
5. Flow-Down of Export Control Clauses to Subcontracts
Comment: Several respondents stated that the flow-down of any
export-control related clauses is problematic for universities.
Commercial entities may not be aware of NSDD 189 and fundamental
research. Overuse of the clause when unnecessary could harm the
university-industry-government research partnership.
DoD Response: The clause in the interim rule at DFARS 252.204-7008,
Requirements for Contracts Involving Export-Controlled Items, requires
flow-down only to subcontracts that are expected to involve access to
or generation of export-controlled items. The clause in the interim
rule at 252.204-7009, Requirements Regarding Potential Access to
Export-Controlled Items, must be used when the parties do not
anticipate that the contractor will generate or need access to export-
controlled items and does not include a flow-down requirement.
6. Termination for Convenience
Comment: One respondent requested that termination for convenience
be allowed for those projects that begin as fundamental research but
later develop export control issues.
DoD Response: The clause in the interim rule at 252.204-7009,
Requirements Regarding Potential Access to Export-Controlled Items,
addresses this issue. Paragraph (c) of the clause states that if,
during performance of the contract, the contractor notifies the
contracting officer that the contractor will generate or need access to
export-controlled items, the contracting officer may, as one of three
possible courses of action, terminate the contract in whole or in part
for the convenience of the Government in accordance with the
Termination clause of the contract.
7. Reasonable Limits on Identifying Foreign Persons
Comment: One respondent commented that DoD should place limits on
identifying foreign persons and should avoid unnecessarily broad
reviews of individuals working on subcontracted research efforts at
universities.
DoD Response: The comment is not relevant to this DFARS rule. The
rule does not address requirements for identification of foreign
persons.
This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.
B. Regulatory Flexibility Act
DoD does not expect this rule to have a significant economic impact
on a substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because all
contractors, including small entities, are already subject to export-
control laws and regulations. The requirements of this rule reinforce
existing responsibilities. Therefore, DoD has not performed an initial
regulatory flexibility analysis. DoD invites comments from small
businesses and other interested parties. DoD also will consider
comments from small entities concerning the affected DFARS subparts in
accordance with 5 U.S.C. 610. Such comments should be submitted
separately and should cite DFARS Case 2004-D010.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply, because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.
D. Determination To Issue an Interim Rule
A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to publish an
interim rule prior to affording the public an opportunity to comment.
This interim rule implements Section 890(a) of the National Defense
Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section
890(a) requires DoD to prescribe regulations, not later than July 26,
2008, requiring DoD contractors providing goods or technology subject
to export controls under the Arms Export Control Act or the Export
Administration Act of 1979 to comply with those Acts and applicable
regulations, including the International Traffic in Arms Regulations
and the Export Administration Regulations. Comments received in
response to this interim rule will be considered in the formation of
the final rule.
[[Page 42278]]
List of Subjects in 48 CFR Parts 204, 235, and 252
Government procurement.
Michele P. Peterson,
Editor, Defense Acquisition Regulations System.
0
Therefore, 48 CFR parts 204, 235, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 204, 235, and 252 continues
to read as follows:
Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.
PART 204--ADMINISTRATIVE MATTERS
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2. Subpart 204.73 is added to read as follows:
Subpart 204.73--Export-Controlled Items
Sec.
204.7300 Scope of subpart.
204.7301 Definitions.
204.7302 General.
204.7303 Policy.
204.7304 Procedures.
204.7305 Contract clauses.
Subpart 204.73--Export-Controlled Items
204.7300 Scope of subpart.
This subpart implements Section 890(a) of the National Defense
Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
204.7301 Definitions.
As used in this subpart--
Applied research means the effort that--
(1) Normally follows basic research, but may not be severable from
the related basic research;
(2) Attempts to determine and exploit the potential of scientific
discoveries or improvements in technology, materials, processes,
methods, devices, or techniques; and
(3) Attempts to advance the state of the art.
Export-controlled items is defined in the clauses at 252.204-7008
and 252.204-7009.
Fundamental research, as defined by National Security Decision
Directive (NSDD) 189, means basic and applied research in science and
engineering, the results of which ordinarily are published and shared
broadly within the scientific community. This is distinguished from
proprietary research and from industrial development, design,
production, and product utilization, the results of which ordinarily
are restricted for proprietary or national security reasons.
204.7302 General.
Export control laws and regulations restrict the transfer, by any
means, of certain types of items to unauthorized persons. The
International Traffic in Arms Regulations (ITAR) and the Export
Administration Regulations (EAR) establish these restrictions. See PGI
204.7302 for additional information.
204.7303 Policy.
(a) It is in the interest of both the Government and the contractor
to have a common understanding of export-controlled items expected to
be involved in contract performance.
(b) The requiring activity shall review each acquisition to
determine if, during performance of the contemplated contract, the
contractor is expected to generate or require access to export-
controlled items.
204.7304 Procedures.
(a) Prior to issuance of a solicitation for research and
development, the requiring activity shall notify the contracting
officer in writing when--
(1) Export-controlled items are expected to be involved; or
(2) The work is fundamental research only, and export-controlled
items are not expected to be involved.
(b) Prior to issuance of a solicitation for supplies or services,
the requiring activity shall notify the contracting officer in writing
when--
(1) Export-controlled items are expected to be involved; or
(2) The requiring activity is unable to determine that export-
controlled items will not be involved. See PGI 204.7304 for guidance
regarding this notification requirement.
204.7305 Contract clauses.
(a) Use the clause at 252.204-7008, Requirements for Contracts
Involving Export-Controlled Items, in solicitations and contracts when
the requiring activity provides the notification at 204.7304(a)(1) or
(b)(1), indicating that export-controlled items are expected to be
involved in the performance of the contract.
(b) Use the clause at 252.204-7009, Requirements Regarding
Potential Access to Export-Controlled Items, in solicitations and
contracts--
(1) For research and development, except when the clause at
252.204-7008 will be included; or
(2) For supplies and services, when the requiring activity provides
the notification at 204.7304(b)(2).
PART 235--RESEARCH AND DEVELOPMENT CONTRACTING
235.071 [Redesignated]
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3. Section 235.071 is redesignated as section 235.072.
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4. A new section 235.071 is added to read as follows:
235.071 Export-controlled items.
For requirements regarding access to export-controlled items, see
Subpart 204.73.
PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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5. Sections 252.204-7008 and 252.204-7009 are added to read as follows:
252.204-7008 Requirements for contracts involving export-controlled
items.
As prescribed in 204.7305(a), use the following clause:
Requirements for Contracts Involving Export-Controlled Items (Jul 2008)
(a) Definition. Export-controlled items, as used in this clause,
means items subject to the Export Administration Regulations (EAR)
(15 CFR Parts 730-774) or the International Traffic in Arms
Regulations (22 CFR Parts 120-130). The term includes:
(1) Defense items, defined in the Arms Export Control Act, 22
U.S.C. 2778(j)(4)(A), as defense articles, defense services, and
related technical data. The term ``defense items'' includes
information and technology.
(2) Items, defined in the EAR as ``commodities, software, and
technology,'' terms that are also defined in the EAR, 15 CFR 772.1.
Regarding the release of items subject to the EAR to foreign
nationals within the United States, ``items'' only include
technology and software source code (and not commodities) subject to
the EAR.
(b) The parties anticipate that, in the performance of this
contract, the Contractor will generate or need access to export-
controlled items.
(c) The Contractor shall comply with all applicable laws and
regulations regarding export-controlled items, including the
requirement for contractors to register with the Department of State
in accordance with the ITAR. The Contractor shall consult with the
Department of State regarding any questions relating to the ITAR and
with the Department of Commerce regarding any questions relating to
the EAR.
(d) The Contractor's responsibility to comply with all
applicable laws and regulations regarding export-controlled items
exists independent of, and is not established or limited by, the
information provided by this clause.
(e) Nothing in the terms of this contract is intended to change,
supersede, or waive any of the requirements of applicable Federal
laws, Executive orders, and regulations, including but not limited
to--
(1) The Export Administration Act of 1979, as amended (50 U.S.C.
App. 2401-2420);
[[Page 42279]]
(2) The Arms Export Control Act of 1976 (22 U.S.C. 2751 et
seq.);
(3) The International Emergency Economic Powers Act (50 U.S.C.
1701-1707);
(4) The Export Administration Regulations (15 CFR Parts 730-
774);
(5) The International Traffic in Arms Regulations (22 CFR Parts
120-130);
(6) Executive Order 13222, as extended;
(7) DoD Directive 2040.2, International Transfers of Technology,
Goods, Services, and Munitions; and
(8) DoD Industrial Security Regulation (DoD 5220.22-R).
(f) The Contractor shall include the substance of this clause,
including this paragraph (f), in all subcontracts that are expected
to involve access to or generation of export-controlled items.
(End of clause)
252.204-7009 Requirements regarding potential access to export-
controlled items.
As prescribed in 204.7305(b), use the following clause:
Requirements Regarding Potential Access to Export-Controlled Items (Jul
2008)
(a) Definition. Export-controlled items, as used in this clause,
means items subject to the Export Administration Regulations (EAR)
(15 CFR Parts 730-774) or the International Traffic in Arms
Regulations (22 CFR Parts 120-130). The term includes:
(1) Defense items, defined in the Arms Export Control Act, 22
U.S.C. 2778(j)(4)(A), as defense articles, defense services, and
related technical data. The term ``defense items'' includes
information and technology.
(2) Items, defined in the EAR as ``commodities, software, and
technology,'' terms that are also defined in the EAR, 15 CFR 772.1.
Regarding the release of items subject to the EAR to foreign
nationals within the United States, ``items'' only include
technology and software source code (and not commodities) subject to
the EAR.
(b) The parties do not anticipate that, in the performance of
this contract, the Contractor will generate or need access to
export-controlled items.
(c) If, during the performance of this contract, the Contractor
becomes aware that the Contractor will generate or need access to
export-controlled items--
(1) The Contractor shall notify the Contracting Officer in
writing; and
(2) The Contracting Officer will expeditiously--
(i) Modify the contract to include the Defense Federal
Acquisition Regulation Supplement clause 252.204-7008, Requirements
for Contracts Involving Export-Controlled Items;
(ii) Negotiate a contract modification that eliminates the
requirement for performance of work that would involve export-
controlled items; or
(iii) Terminate the contract, in whole or in part, as may be
appropriate, for the convenience of the Government, in accordance
with the Termination clause of the contract.
(End of clause)
252.235-7002, 252.235-7003, 252.235-7010, and 252.235-7011 [Amended]
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6. Sections 252.235-7002, 252.235-7003, 252.235-7010, and 252.235-7011
are amended in the introductory text by removing ``235.071'' and adding
in its place ``235.072''.
[FR Doc. E8-16673 Filed 7-18-08; 8:45 am]
BILLING CODE 5001-08-P
