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[Federal Register Volume 77, Number 99 (Tuesday, May 22, 2012)]
[Rules and Regulations]
[Pages 30361-30365]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11560]

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DEPARTMENT OF DEFENSE

Defense Acquisitions Regulations System

48 CFR Parts 225 and 252

RIN 0750-AH70

Defense Federal Acquisition Regulation Supplement; Defense Trade 
Cooperation Treaty With the United Kingdom (DFARS 2012-D034)

AGENCY: Defense Acquisition Regulations System; Department of Defense 
(DoD).

ACTION: Interim rule.

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SUMMARY: DoD is issuing an interim rule amending the Defense Federal 
Acquisition Regulation Supplement (DFARS) to implement requirements of 
the Treaty Between the Government of the United States of America and 
the Government of the United Kingdom of Great Britain and Northern 
Ireland Concerning Defense Trade Cooperation (the Treaty) and the 
Security Cooperation Act of 2010 regarding export control regulations 
between the United States and the United Kingdom. The Treaty and 
statute establish an Approved Community that includes members of the 
U.S. Government and the government of the United Kingdom.

DATES: Effective Date: May 22, 2012.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before July 23, 2012, to be 
considered in the formation of the final rule.

ADDRESSES: Submit comments identified by DFARS Case 2012-D034, using 
any of the following methods:
    Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by entering ``DFARS Case 
2012-D034'' under the heading ``Enter keyword or ID'' and selecting 
``Search.'' Select the link ``Submit a Comment'' that corresponds with 
``DFARS Case 2012-D034.'' Follow the instructions provided at the 
``Submit a Comment'' screen. Please include your name, company name (if 
any), and ``DFARS Case 2012-D034'' on your attached document.
     Email: dfars@osd.mil. Include DFARS Case 2012-D034 in the 
subject line of the message.
     Fax: 571-372-6094.
     Mail: Defense Acquisition Regulations System, Attn: 
(Insert case manager's name), OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 
Defense Pentagon, Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov, 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Ms. Amy Williams, Defense Acquisition 
Regulations System, OUSD (AT&L) DPAP/DARS, Room 3B855, 3060 Defense 
Pentagon, Washington, DC 20301-3060. Telephone 571-372-6106; facsimile 
571-372-6101.

SUPPLEMENTARY INFORMATION: 

I. Background

    This rule streamlines the export control regulations between the 
United States and the United Kingdom under specified circumstances.
    The U.S. Government controls exports of defense articles, technical 
data, and defense services. The governing law is the Arms Export 
Control Act (AECA) (22 U.S.C. 2778 et seq.) and implementing 
regulations in the International Traffic in Arms Regulations (ITAR) (22 
CFR 120-130).
    Under the ITAR, the Department of State manages an export licensing 
system in which numerous government approvals are often necessary for 
companies to hold discussions about potential projects, pursue joint 
activities, ship hardware, or transfer know-how to one another, and 
even sometimes to transfer engineers and other company employees from 
one country to another. This process can be challenging and time 
consuming for U.S. exporters and for foreign firms in their supply 
chains.
    The U.S. concluded the Treaty with the United Kingdom to enable 
their militaries, security authorities, and their approved industries 
to exchange defense articles, technical information, and defense 
services more freely. The Treaty establishes exemptions for certain 
exports and transfers that meet the Treaty requirements. Other exports 
and transfers remain governed by AECA and the ITAR.
    The Treaty and implementing arrangements with the United Kingdom 
may be accessed at http://www.state.gov/t/pm/rls/othr/misc/92770.htm.
    The implementing legislation is in Title I of Pub. L. 111-266, the 
Security Cooperation Act of 2010.
    The Senate conditions upon ratification are at http://www.govtrack.us/congress/billtext.xpd?bill=s111-3847.

[[Page 30362]]

    The U.S. Department of State regulations implementing the Treaty 
with the United Kingdom are at 22 CFR part 120.
    The Treaty establishes an Approved Community that includes members 
of the U.S. Government and the government of the United Kingdom, 
including various Ministries, Departments, and Agencies, as well as 
selected defense and security companies and facilities. Exports of most 
U.S. defense articles, including technical data and defense services, 
are generally permitted to enter and to move freely within this 
community, without the need for government approvals and licenses--
provided that all persons comply with all other statutory and 
regulatory requirements concerning the import of defense articles and 
defense services or the possession or transfer of defense articles,--
when in support of--
     Combined U.S.-U.K. military or counterterrorism 
operations;
     U.S.-U.K. cooperative security and defense research, 
development, production, and support programs;
     Mutually agreed to security and defense projects that are 
for U.K. Government use only; and
     U.S. Government end use.

Under the Treaty, instead of a U.S. exporter preparing and requesting 
U.S. Department of State approval of an export license or Technical 
Assistance Agreement for a project, which would normally take around 
45-60 days, the exporter will verify information on the U.S. Department 
of State Web site that--
     The U.K. industry member is a member of the Approved 
Community;
     The project is on the list of approved projects and items 
are for U.S. Government end use; and
     The defense article is not on the Exempted Technology 
List.

If the members of the United States Community and United Kingdom 
Community, the project, and the technology are verified, then the U.S. 
exporter and the U.K. member may proceed without export licenses.
    In addition to checking the above three lists, an exporter using 
the Treaty also must comply with any applicable related ITAR 
requirements and 22 CFR 126.17(g) and other applicable U.S. laws and 
regulations. These requirements include marking and recordkeeping to 
ensure that export-controlled items are recognized as such and handled 
accordingly. Similarly, DFARS 225.7902 implements requirements that 
relate to exports that, for example, a prospective contractor may make 
under a DoD solicitation or that a contractor may make in performance 
of a DoD contract.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

III. Regulatory Flexibility Act

    DoD does not expect this interim 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 the rule does not impose burdens on small businesses. Small 
businesses that are exporters will benefit from being able to use the 
streamlined treaty process to make exports that are associated with 
responding to DoD solicitations and performance of DoD contracts. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    The objective of the rule is to streamline the export control 
regulations between the United States and the United Kingdom under 
specified circumstances. The legal basis for the rule is the Security 
Cooperation Act of 2010 (Pub. L. 111-266), enacted October 8, 2010.
    Although this rule adds a representation that requires the approval 
of the Office of Management and Budget under 44 U.S.C. chapter 35, the 
net effect will be to significantly streamline and reduce paperwork 
requirements between the United States and the United Kingdom under the 
process set forth in the Treaty as implemented by the ITAR by no longer 
requiring individual export control licenses in certain circumstances 
within the Approved Community. In short, one representation per offeror 
will streamline the current process.
    The great majority of industry members that comprise the Approved 
Community are not small businesses due to the specialized knowledge of 
export control regulations and the cost involved in compliance. 
Therefore, the cost is anticipated to be less than five million 
dollars, but will accrue a net cost savings by streamlining the 
requirements of industry compared to the present export control 
licensing procedures.
    The rule does not duplicate, overlap, or conflict with any other 
Federal rules.
    This rule implements the Treaty and statute and DoD is not aware of 
any alternative methods of achieving the objectives of the rule. 
Furthermore, the net impact of the rule is expected to be beneficial to 
small businesses.
    DoD invites comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD will also consider comments from small entities concerning the 
existing regulations in subparts affected by this rule in accordance 
with 5 U.S.C. 610. Interested parties must submit such comments 
separately and should cite 5 U.S.C. 610 (DFARS Case 2012-D034), in 
correspondence.

IV. Paperwork Reduction Act

    The rule contains information collection requirements that require 
the approval of the Office of Management and Budget under the Paperwork 
Reduction Act (44 U.S.C. chapter 35). OMB has cleared this information 
collection requirement under OMB Control Number 0704-0488, titled: 
Defense Trade Cooperation Treaty with the United Kingdom (DFARS 
252.225).
    The annual reporting burden is estimated as follows:
    Respondents: 110.
    Responses per respondent: 1.
    Total annual responses: 110.
    Preparation hours per response: 0.1.
    Total response burden hours: 11.
    This rule will result in a significantly streamlined process and 
reduced paperwork requirements overall between the United States and 
the United Kingdom under the process set forth in the Treaty as 
implemented by the ITAR by no longer requiring individual export 
licenses within the Approved Community. In short, one representation 
per offeror will streamline the current process.

 B. Request for Comments Regarding Paperwork Burden

    Written comments and recommendations on the information collection, 
including suggestions for reducing this burden, should be sent not 
later than July 23, 2012 to Ms. Jasmeet Seehra at the Office of 
Management and Budget, Desk Officer for DoD, Room 10236, New Executive 
Office Building, Washington, DC 20503, or email Jasmeet_K._Seehra@omb.eop.gov, with a

[[Page 30363]]

copy to the Defense Acquisition Regulations System, Attn: (Ms. Amy 
Williams), OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, 
Washington, DC 20301-3060. Comments can be received from 30 to 60 days 
after the date of this notice, but comments to OMB will be most useful 
if received by OMB within 30 days after the date of this notice.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the DFARS, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    To request more information on this information collection or to 
obtain a copy of the information collection and associated collection 
instruments, please write to the Defense Acquisition Regulations 
System, Attn: (Ms. Amy Williams), OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 
Defense Pentagon, Washington, DC 20301-3060, or email dfars@osd.mil. 
Include DFARS Case 2012-D034 in the subject line of the message. 
Requesters may obtain a copy of the supporting statement from the point 
of contact specified herein. Please cite OMB Control Number 0704-0488, 
Defense Trade Cooperation Treaty with the United Kingdom (DFARS 
252.225), in all correspondence.

VI. 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 promulgate this 
interim rule without prior opportunity for public comment. This action 
is necessary because the Department of State final rule implementing 
the Treaty between the Government of the United States of America and 
the Government of the United Kingdom of Great Britain and Northern 
Ireland Concerning Defense Trade Cooperation (Treaty Doc. 110-7) and 
making other updates to the ITAR became effective on April 13, 2012 (77 
FR 23538 dated April 19, 2012). Expedited implementation of an interim 
DFARS rule is based upon the DFARS' integral ties with the ITAR and the 
National Industrial Security Program Operating Manual (NISPOM). The 
NISPOM and DFARS regulations operationalize the ITAR guidance for 
members of the United States Community and United Kingdom Community in 
the Approved Community responsible for most of the operational 
functions.
    However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will 
consider public comments received in response to this interim rule in 
the formation of the final rule.

List of Subjects in 48 CFR Parts 225 and 252

    Government procurement.

Ynette R. Shelkin,
Editor, Defense Acquisition Regulations System.

    Therefore, 48 CFR parts 225 and 252 are amended as follows:

0
1. The authority citation for 48 CFR parts 225 and 252 continues to 
read as follows:

    Authority:  41 U.S.C. 1303 and 48 CFR chapter 1.

PART 225--FOREIGN ACQUISITION

0
2. Add subpart 225.79 to read as follows:
Subpart 225.79--EXPORT CONTROL
Sec.
225.7900 Scope of subpart.
225.7901 [Reserved]
225.7902 Defense Trade Cooperation Treaty with the United Kingdom.
225.7902-1 Definitions.
225.7902-2 Purpose.
225.7902-3 Policy.
225.7902-4 Procedures.
225.7902-5 Solicitation provision and contract clause.

Subpart 225.79--EXPORT CONTROL

225.7900  Scope of subpart.

    This subpart implements the requirements of the Security 
Cooperation Act of 2010 (Pub. L. 111-266) and the Treaty Between the 
Government of the United States of America and the Government of the 
United Kingdom of Great Britain and Northern Ireland Concerning Defense 
Trade Cooperation (the Treaty) regarding export control. See PGI 
225.7902 for additional information.

225.7901  [Reserved]

225.7902  Defense Trade Cooperation Treaty with the United Kingdom.

    This section implements the Treaty and the Implementing Arrangement 
for DoD solicitations and contracts that authorize prospective 
contractors and contractors to use the Treaty to respond to DoD 
solicitations and in the performance of DoD contracts.

225.7902-1  Definitions.

    Approved Community, defense articles, export, Implementing 
Arrangement, qualifying defense articles, transfer, Treaty, and U.S. 
DoD Treaty-eligible requirements are defined in DFARS clause 252.225-
7047, Exports by Approved Community Members in Performance of the 
Contract.

225.7902-2  Purpose.

    The Treaty permits the export of certain U.S. defense articles, 
technical data, and defense services, without U.S. export licenses or 
other written authorization under the International Traffic in Arms 
Regulations (ITAR) into and within the Approved Community, as long as 
the exports are in support of purposes specified in the Treaty. All 
persons must continue to comply with statutory and regulatory 
requirements outside of DFARS and ITAR concerning the import of defense 
articles and defense services or the possession or transfer of defense 
articles, including, but not limited to, regulations issued by the 
Bureau of Alcohol, Tobacco, Firearms and Explosives found at 27 CFR 
Parts 447, 478, and 479, which are unaffected by the Defense Trade 
Cooperation Treaty between the United States and the United Kingdom. 
The Approved Community consists of U.S. entities that are registered 
with the Department of State and are eligible exporters, the U.S. 
Government, and certain governmental and commercial facilities in the 
United Kingdom that are approved and listed by the U.S. Government. See 
PGI 225.7902-2 for additional information.

225.7902-3  Policy.

    DoD will facilitate maximum use of the Treaty by prospective 
contractors responding to DoD solicitations and by contractors eligible 
to export qualifying defense articles under DoD contracts in accordance 
with 22 CFR 126.17(g).

225.7902-4  Procedures.

    (a) For all solicitations and contracts eligible for Treaty 
coverage (see PGI 225.7902-4(1)), the program manager shall identify in 
writing and submit to the contracting officer prior to issuance of a 
solicitation and prior to award of a contract--
    (1) The qualifying Treaty Scope paragraph (Article 3(1)(a), 
3(1)(b), or 3(1)(d)); and
    (2) The qualifying defense article(s) using the categories 
described in 22 CFR 126.17(g).
    (b) If applicable, the program manager shall also identify in 
writing and submit to the contracting officer any specific Part C, 
Treaty-exempted technology list

[[Page 30364]]

items, terms, and conditions for applicable contract line item numbers 
(See PGI 225.7902-4(2)).

225.7902-5  Solicitation provision and contract clause.

    (a) Use the provision at 252.225-7046, Exports by Approved 
Community Members in Response to the Solicitation, in solicitations 
containing the clause at 252.225-7047.
    (b)(1) Use the clause at 252.225-7047, Exports by Approved 
Community Members in Performance of the Contract, in solicitations and 
contracts when--
    (i) Export-controlled items are expected to be involved in the 
performance of the contract and the clause at 252.204-7008 is used; and
    (ii) At least one contract line item is intended to satisfy a U.S. 
DoD Treaty-eligible requirement.
    (2) The contracting officer shall complete paragraph (b) of the 
clause using information the program manager provided as required by 
225.7902-4(a).

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Add section 252.225-7046 to read as follows:

252.225-7046  Exports by Approved Community Members in Response to the 
Solicitation.

    As prescribed in 225.7902-5(a), use the following provision:

EXPORTS BY APPROVED COMMUNITY MEMBERS IN RESPONSE TO THE SOLICITATION 
(MAY 2012)

    (a) Definitions. The definitions of Approved Community, defense 
articles, export, Implementing Arrangement, qualifying defense 
articles, transfer, Treaty, and U.S. DoD Treaty-eligible 
requirements in DFARS clause 252.225-7047 apply to this provision.
    (b) All contract line items in the contemplated contract, except 
any identified in this paragraph, are intended to satisfy U.S. DoD 
Treaty-eligible requirements. Specific defense articles exempt from 
Treaty eligibility will be identified in those contract line items 
that are otherwise Treaty-eligible.

CONTRACT LINE ITEMS NOT INTENDED TO SATISFY U.S. DoD TREATY-ELIGIBLE 
REQUIREMENTS:

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[Enter Contract Line Item Number(s) or enter ``None'']

    (c) Approved Community members responding to the solicitation 
may only export or transfer defense articles that specifically 
respond to the stated requirements of the solicitation.
    (d) Subject to the other terms and conditions of the 
solicitation and the contemplated contract that affect the 
acceptability of foreign sources or foreign end products, 
components, parts, or materials, Approved Community members are 
permitted, but not required, to use the Treaty for exports or 
transfers of qualifying defense articles in preparing a response to 
this solicitation.
    (e) Any conduct by an offeror responding to this solicitation 
that falls outside the scope of the Treaty, the Implementing 
Arrangement, and the implementing regulations of the Department of 
State in 22 CFR 126.17 (United Kingdom), and 22 CFR 126 Supplement 
No. 1 (exempted technologies list) is subject to all applicable 
International Traffic in Arms Regulations (ITAR) requirements, 
including any criminal, civil, and administrative penalties or 
sanctions, as well as all other United States statutory and 
regulatory requirements outside of ITAR.
    (f) If the offeror uses the procedures established pursuant to 
the Treaty, the offeror agrees that, with regard to the export or 
transfer of a qualifying defense article associated with responding 
to the solicitation, the offeror shall--
    (1) Comply with the requirements and provisions of the Treaty, 
the Implementing Arrangement, and corresponding regulations 
(including the ITAR) of the U.S. Government and the government of 
the United Kingdom;
    (2) Prior to the export or transfer of a qualifying defense 
article--
    (i) Mark, identify, transmit, store, and handle any defense 
articles provided for the purpose of responding to such 
solicitations, as well as any defense articles provided with or 
developed pursuant to their responses to such solicitations, in 
accordance with the Treaty, the Implementing Arrangement, and 
corresponding United States Government and the government of the 
United Kingdom regulations including, but not limited to, the 
marking and classification requirements described in the applicable 
regulations;
    (ii) Comply with the re-transfer or re-export provisions of the 
Treaty, the Implementing Arrangement, and corresponding United 
States Government and the government of the United Kingdom 
regulations, including, but not limited to, the re-transfer and re-
export requirements described in the applicable regulations; and
    (iii) Acknowledge that any conduct that falls outside or in 
violation of the Treaty, Implementing Arrangement, and implementing 
regulations of the applicable government including, but not limited 
to, unauthorized re-transfer or re-export in violation of the 
procedures established in the applicable Implementing Arrangement 
and implementing regulations, remains subject to applicable 
licensing requirements of the government of the United Kingdom and 
the United States Government, including any criminal, civil, and 
administrative penalties or sanctions contained therein; and
    (3) Flow down the substance of this provision, including this 
paragraph (f)(3), to any subcontractor at any tier intending to use 
the Treaty in responding to this solicitation.
    (g) Representation. The offeror shall check one of the following 
boxes and sign the representation:

    [square] The offeror represents that export(s) or transfer(s) of 
qualifying defense articles were made in preparing its response to 
this solicitation and that such export(s) or transfer(s) complied 
with the requirements of this provision.
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Name/Title of Duly Authorized Representative
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Date

    [square] The offeror represents that no export(s) or transfer(s) 
of qualifying defense articles were made in preparing its response 
to this solicitation.
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Name/Title of Duly Authorized Representative
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Date

(End of provision)

0
4. Add section 252.225-7047 to read as follows:

252.225-7047  Exports by Approved Community Members in Performance of 
the Contract.

    As prescribed in 225.7902-5(b), use the following clause:

EXPORTS BY APPROVED COMMUNITY MEMBERS IN PERFORMANCE OF THE CONTRACT 
(MAY 2012)

    (a) Definitions. As used in this clause--
    Approved Community means the U.S. Government, U.S. entities that 
are registered and eligible exporters, and certain government and 
industry facilities in the United Kingdom that are approved and 
listed by the U.S. Government.
    Defense articles means articles, services, and related technical 
data, including software, in tangible or intangible form, listed on 
the United States Munitions List of the International Traffic in 
Arms Regulations (ITAR), as modified or amended.
    Export means the initial movement of defense articles from the 
United States Community to the United Kingdom Community.
    Implementing Arrangement means the Implementing Arrangement 
Pursuant to the Treaty between the Government of the United States 
of America and the government of the United Kingdom of Great Britain 
and Northern Ireland Concerning Defense Trade Cooperation signed on 
February 14, 2008.
    Qualifying defense articles means defense articles that are not 
exempt from the scope of the Treaty as defined in 22 CFR 126.17(g).
    Transfer means the movement of previously exported defense 
articles within the Approved Community.
    Treaty means the Treaty between the Government of the United 
States of America and the government of the United Kingdom of Great 
Britain and Northern Ireland Concerning Defense Trade Cooperation 
signed at Washington and London on June 21 and 26, 2007.
    United Kingdom Community member means a United Kingdom 
government authority or nongovernmental entity or facility on the 
United Kingdom Community list accessible at http://pmddtc.state.gov.
    United States Community means--
    (1) Departments and agencies of the U.S. Government, including 
their personnel, with,

[[Page 30365]]

as appropriate, security accreditation and a need-to-know; and
    (2) Nongovernmental U.S. entities registered with the Department 
of State and eligible to export defense articles under U.S. law and 
regulation, including their employees, with, as appropriate, 
security accreditation and a need-to-know.
    U.S. DoD Treaty-eligible requirements means any defense article 
acquired by DoD for use in a combined military or counterterrorism 
operation, cooperative research, development, production, or support 
program, or DoD end use, as described in Article 3 of the Treaty and 
Sections 2 and 3 of the Implementing Arrangement.
    (b) All contract line items in this contract, except any 
identified in this paragraph, are intended to satisfy U.S. DoD 
Treaty-eligible requirements. Specific defense articles exempt from 
Treaty eligibility will be identified in those contract line items 
that are otherwise Treaty-eligible.

CONTRACT LINE ITEMS NOT INTENDED TO SATISFY U.S. DoD TREATY-ELIGIBLE 
REQUIREMENTS:

-----------------------------------------------------------------------
[Enter Contract Line Item Number(s) or enter ``None'']

    (c) Subject to the other terms and conditions of this contract 
that affect the acceptability of foreign sources or foreign end 
products, components, parts, or materials, Approved Community 
members are permitted, but not required, to use the Treaty for 
exports or transfers of qualifying defense articles in performance 
of the contract.
    (d) Any conduct by the Contractor that falls outside the scope 
of the Treaty, the Implementing Arrangement, and 22 CFR 126.17(g) is 
subject to all applicable ITAR requirements, including any criminal, 
civil, and administrative penalties or sanctions, as well as all 
other United States statutory and regulatory requirements outside of 
ITAR, including, but not limited to, regulations issued by the 
Bureau of Alcohol, Tobacco, Firearms and Explosives found at 27 CFR 
Parts 447, 478, and 479, which are unaffected by the Treaty.
    (e) If the Contractor is an Approved Community member, the 
Contractor agrees that--
    (1) The Contractor shall comply with the requirements of the 
Treaty, the Implementing Arrangement, the ITAR, and corresponding 
regulations of the U.S. Government and the government of the United 
Kingdom; and
    (2) Prior to the export or transfer of a qualifying defense 
article, the Contractor--
    (i) Shall mark, identify, transmit, store, and handle any 
defense articles provided for the purpose of responding to such 
solicitations, as well as any defense articles provided with or 
developed pursuant to their responses to such solicitations, in 
accordance with the Treaty, the Implementing Arrangement, and 
corresponding United States Government and the government of the 
United Kingdom regulations including, but not limited to, the 
marking and classification requirements described in the applicable 
regulations;
    (ii) Shall comply with the re-transfer or re-export provisions 
of the Treaty, this Implementing Arrangement, and corresponding 
United States Government and the government of the United Kingdom 
regulations, including, but not limited to, the re-transfer and re-
export requirements described in the applicable regulations; and
    (iii) Shall acknowledge that any conduct that falls outside or 
in violation of the Treaty, Implementing Arrangement, and 
implementing regulations of the applicable government including, but 
not limited to, unauthorized re-transfer or re-export in violation 
of the procedures established in the applicable Implementing 
Arrangement and implementing regulations, remains subject to 
applicable licensing requirements of the government of the United 
Kingdom and the United States Government, including any criminal, 
civil, and administrative penalties or sanctions contained therein.
    (f) The contractor shall include the substance of this clause, 
including this paragraph (f), in all subcontracts that may require 
exports or transfers of qualifying defense articles in connection 
with deliveries under the contract.

(End of clause)

[FR Doc. 2012-11560 Filed 5-21-12; 8:45 am]
BILLING CODE 5001-06-P
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