On March 22, the Department of Defense (DOD) issued a proposed rule that would amend the Defense Federal Acquisition Regulations (DFARS) to require certain contractors to provide the Defense Contract Management Agency (DCMA) with relevant export authorizations (i.e., export licenses, exemptions, or exceptions). Currently, contractors are only required to make their export authorizations available for DCMA personnel to review at the contractor’s site. This rule would change that by shifting the burden to federal contractors.

The proposed rule would only apply to those contractors performing on contracts that require the following:

  1. Performance in or delivery to a government quality assurance country.
  2. Government quality assurance surveillance oversight.

The proposed changes would apply to contracts at or below the simplified acquisition threshold for commercial products including commercially available off-the-shelf items and commercial services.

Government quality assurance countries include:

  • Australia
  • Belgium
  • Canada
  • Czech Republic
  • Denmark
  • Finland
  • France
  • Germany
  • Greece
  • Israel
  • Republic of Korea
  • Netherlands
  • Norway
  • Poland
  • Romania
  • Slovakia
  • Spain
  • Sweden
  • Turkey
  • United Kingdom

DCMA periodically conducts quality assurance reviews to ensure contractors are meeting certain standards. Sometimes DCMA delegates the responsibility to qualified foreign inspectors. The current regulations requiring DCMA personnel to travel to the contractor’s international worksite to view export authorizations unduly hamper the agency’s ability to make that decision. Covered contractors will soon be required to provide the relevant authorizations and contact information for the export point of contact to the applicable DCMA contracting officer, allowing the agency to receive and review the authorizations without the need for lengthy travel. This change will streamline the process by placing the burden on contractors.

DFARS 252.225-7048, Export Controlled Items, will be amended to include the new requirement. The DOD is considering comments to the proposed rule through May 22, 2023.

Please contact the authors with questions about this proposed rule and how it could affect your business.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Thad McBride Thad McBride

Thad McBride advises public and private companies on the legal considerations essential to successful business operations in a global marketplace. He focuses his practice on counseling clients on compliance with U.S. export regulations (ITAR and EAR), economic sanctions and embargoes, import controls (CBP)…

Thad McBride advises public and private companies on the legal considerations essential to successful business operations in a global marketplace. He focuses his practice on counseling clients on compliance with U.S. export regulations (ITAR and EAR), economic sanctions and embargoes, import controls (CBP), and the Foreign Corrupt Practices Act (FCPA). He also advises clients on anti-boycott controls, and assists companies with matters involving the Committee on Foreign Investment in the United States (CFIUS). Thad supports international companies across a range of industries, including aviation, automotive, defense, energy, financial services, manufacturing, medical devices, oilfield services, professional services, research and development, retail, and technology. Beyond advising on day-to-day compliance matters, Thad regularly assists clients in investigations and enforcement actions brought by government agencies, including the U.S. Department of Justice (DOJ), the U.S. Treasury Department Office of Foreign Assets Control (OFAC), the U.S. State Department Directorate of Defense Trade Controls (DDTC), Customs and Border Protection (CBP), the U.S. Commerce Department Bureau of Industry & Security (BIS), and the Securities & Exchange Commission.

Photo of Todd Overman Todd Overman

Todd Overman is the chair of the firm’s Government Contracts practice and Managing Partner of the Washington, D.C. office.  He has over twenty years of experience advising companies on the unique aspects of doing business with the federal government. Over the last decade…

Todd Overman is the chair of the firm’s Government Contracts practice and Managing Partner of the Washington, D.C. office.  He has over twenty years of experience advising companies on the unique aspects of doing business with the federal government. Over the last decade, he has advised on more than 50 transactions involving the purchase or sale of a government contractor.