Oct
13

New Agreement Guidelines Posted by DDTC

Posted by Clif Burns at 7:42 pm on October 13, 2009
Category: DDTC

State DepartmentOn Friday the Directorate of Defense Trade Controls (“DDTC”) issued revised guidelines for submitting agreements such as Technical Assistance Agreements (“TAA”) and Manufacturing License Agreements (“MLA”). As most export geeks know, TAAs and MLAs, once submitted to and approved by DDTC, permit, respectively, the exchange of technical data on defense articles with foreigners and the manufacture of defense articles overseas.

Most of the changes in the revised guidelines relate to matters relating to the long-awaited electronic submission of TAAs and MLAs though DDTC’s electronic filing system. Electronic filing of agreements will become mandatory in 2010. After reviewing these new guidelines for electronic submission, my guess is that most exporters would be happy to wait more, a long time more, maybe a decade or so, in fact, for electronic filing of agreements.

What DDTC has managed to do is to make electronic filing even more complicated and difficult than paper filing. Not only must the exporter file everything that it had previously been submitting, including the tediously ornate transmittal letter, but also the exporter must now complete and file with all that a DSP-5 which, in this case, DDTC quaintly calls a “vehicle DSP-5.” Why on earth DDTC can’t simply let exporters upload pdf versions of the agreement documents (a filing procedure used successfully by, for example, almost every court in the country) is unclear. Instead, by adding an additional layer of paperwork, DDTC has just made the procedure more expensive and time-consuming as well as creating the opportunity for mistakes and returned agreements.

Not everything in the new guidelines relates to electronic filing. Some of the changes relate to paper filings before electronic filing becomes mandatory. For example, amendments must now contain a “conformed” copy of the agreement with the changes in bold typeface. The guidelines make clear that “tracked” changes (i.e. additions underlined and deletions stricken out) aren’t acceptable, so it is not entirely clear how DDTC wants agreement filers to indicate the difference between additions and deletions, nor why it is so adamant about not wanting “tracked” changes. Perhaps the computers at DDTC can’t render strikeout text.

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4 Comments:

  • Clif,

    I have submitted two recent Agreements using this ‘Vehicle DSP-5′ method. It is cumbersome, trying to remember what information translates into which block or field on the D-Trade DSP-5 form but the return processing time has been halved!Traditionally it has taken 2-3 months for processing and our first was approved in less than 4 weeks. I’m reserving judgement for now because once the floodgates open, we will see how long they take to process but right now, I’m willing to deal with the confusion in exchange for speed :)

    Comment by C on October 14th, 2009 @ 7:03 am

  • … and why not consider a single common DSP form for all license types that includes a check box at the top of the form to indicate which of the several DSP forms it is that we are completing? If we want to get really fancy, checking that box would grey out blocks that don’t apply, but I think now I am asking too much…

    Comment by Vito on October 14th, 2009 @ 8:19 am

  • Commerce has long licensed technology, including technical assistance (which is very much like “defense services”), on the same form used for hardware. None of the boilerplate in TAAs or the transmittal letters serves any useful purpose: Any meaningful language could all be incorporated by reference, much like some FAR clauses in DoD contracts, and any special conditions or limitations could be imposed through specific conditions or limitations for individual licenses, just like the equally arcane “provisos” now used. TAAs and MLAs are not real contracts; they are simply an arcane form of license. They persist simply because DDTC wants to be different from Commerce, and is insulated from the reality of modern business models by its splendid isolation in Foggy Bottom.

    Comment by Hillbilly on October 14th, 2009 @ 12:05 pm

  • I dread having to use DTrade to submit a TAA or MLA. I had a DSP-5 rejected because I spelled out “Corporation” in our company rather than abbreviate it as it is in our registration. They couldn’t even tell me if I should put a period after the abbreviation. What with all the extraneous paperwork involved in a TAA or MLA I see too many chances for something simple that doesn’t affect the content to hold up a submission.

    I hope they are prepared for the deluge of non-technical questions and frustrations.

    Comment by LDM on October 14th, 2009 @ 5:16 pm

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