Nov
29
Legislation Introduced To Improve DDTC Processing Times
Posted by Clif Burns at 7:52 pm on November 29, 2007
Category: DDTC
Representative Brad Sherman (D-CA) recently introduced, with one other Democrat and two Republicans, a bill to “improve the performance of the defense trade controls functions of the Department of State.” The proposed legislation is a clear response to mounting exporter frustration over increasing delays by the Directorate of Defense Trade Controls (“DDTC”) in processing licenses and other export-related requests.
The centerpiece of the proposed legislation is the imposition of mandatory average processing times. For transactions not subject to Congressional notification requirements, for example, licenses to NATO members, Australia, Japan, New Zealand, and Israel must be processed, on average, within 20 days; 30 days for exports to major non-NATO allies; and 60 days to everyone else. Commodity jurisdiction requests would be required to be acted upon by DDCTwithin 60 days on average.
DDTC’s average processing times for Technical Assistance Agreements (“TAAs”) would need to be 120 days. It’s not clear why the proposed legislation would permit a significant delay in processing TAAs when license requests are put on such a short string. Further, the time limit doesn’t cover approving amendments to TAAs, even though the most significant delays currently being experienced are with respect to such amendments.
The proposed legislation would also significantly change the current provisions of the International Traffic in Arms Regulations (“ITAR”) relating to exports of spare parts. Under the proposed changes, a DDTC license would not be required for exports of spare and replacement parts to NATO members, Australia, New Zealand and Japan in specified circumstances, including that the parts and components are one-for-one replacements for parts and components for an item previously exported pursuant to a DDTC license. Under section 123.16(b)(2) of the ITAR, components or spare parts can be exported without a license in support of a defense article previously authorized for export as long as the value is under $500, the parts are going to the end user and not a distributor, and no more than 24 shipments are made per year to the end user. If this proposal is adopted, spare parts can be exported even if their value exceeds $500 and more than 24 shipments are made per year.
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Copyright © 2007 Clif Burns. All Rights Reserved.
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4 Comments:
Clif,
In addition to your comments, it is my impression that the Bill has another major loop-hole. There is no specific limits on how quickly interagency reviews must be conducted, and no requirement that the reviewing agencies have adequate staff to conduct timely reviews. With the extra staff, DDTC may be able to limit its stack of license applications to 2,000, but DOD may have a boat-load of pending reviews if they can’t keep up with the increased number of staff at DDTC.
With the current extent of contractor contribution to war efforts, I’m also surprised that there is no waiver for exports supporting allies involved in a war effort; e.g. the Governments of Iraq and Afghanistan.
I just attended the BIS Update. As usual, there was a speaker there from the DDTC who, in his address, made a comment to the effect of how they don’t want to control everything. The guy sitting next to me, who I didn’t know, and I looked at each other and laughed. He told me he’s got an item that goes in a military plane – not made of a special metal or design – that is controlled. All of the questions at the initial keynote at this BIS conference related to the DDTC and there slow processing times and policies. At one of the breakouts the moderator mentioned that the DDTC reviewing officers were denying licenses because they don’t license military products for commercial uses. That was confirmed by the DDTC rep. and I can attest to it too. There is no justifiable argument that says we shouldn’t protect vital military technology but there is one that says at some point common sense has to come in to play. Will there be snags and more problems yes, will it be worth it, without a doubt.
At the November SIA conference, this was referred to, with the DDTC representative pointedly stating that a cap to outstanding licenses would result in additional RWAs. His claim was that the cap would “force” him to RWA an application, rather than “Letting it stay on (his) desk long enough to get a ‘yes’ ” to negotiate with the staffing agencies a viable license. I’m not making a judgement call on how much of the actual processing time is truly spent in negotiation, I’m simply reporting.
My own fear is that a low cap will simply backlog at the front end, with the system being configured to disallow new applications until there is a space open under the cap.
Perhaps I’m simply being cynical, but I fear a pushback, and in the end, industry will be punished for attempting to impose deadlines. Industry must remain competitive in lead times as well as pricing and technology. The government has no such requirement.
If DDTC does push back on industry, it will be time for industry to demand that Congress carve up DDTC. There’s no reason Congress can’t or shouldn’t fix DDTC. With a trade deficit that threatens to ruin dollar and with it the economy, no one should tolerate habitual bureaucratic pettiness that imposes a barrier to exports to allies, especially of items that may have had an origin in military use but which have civilian applications. Its about time DDTC remembers who they work for, and if they won’t, then for Congress to either remind them or end them.
