Earlier this week, we reported on the new Agreement Guidelines posted last Friday by the Directorate of Defense Trade Controls (“DDTC”). The new Guidelines provided instructions for electronic filing of requests for approval of agreements to exchange technical data on military items with foreigners (“TAAs”) and agreements for the manufacture of military items overseas (“MLAs”).

One source of concern was the new format announced for filing amendments to these agreements. Although not stated clearly in the new guidelines, DDTC has advised us that the new format, although permissible now, will only become mandatory when electronic filing becomes mandatory in 2010. In the meantime, exporters can still file amendments in the old format — at least if they still have a hard copy of the earlier guidelines which described the old format since those guidelines have disappeared from DDTC’s website.

Another clarification was provided with respect to the requirement that conformed copies of the agreement be submitted with the amendment. DDTC, in describing those conformed copies, stated:

DDTC will only accept amendments that have been “conformed” or consolidated. In other words, all major amendments MUST be submitted as entire agreements with proposed changes identified by bolded text (not “track changes”). Applications that simply describe which sections or articles to the agreement are being modified shall be Returned Without Action

We wondered how all changes, both insertions and deletions, could be bolded without unnecessary confusion. DDTC told us today that additions should be bolded in the conformed copy of the agreement and that deleted sections should simply be deleted, with each deletion being described in the part of the amendment that summarizes the changes accomplished by the amendment. That’s not what the new guidelines say, but it is certainly easier and clearer than bolding all changes in the conformed copy.

On 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.