In response to industry complaints about increased processing times for license applications at DDTC, Robert Maggi, the Managing Director of DDTC, said last week to an industry group that D-Trade would soon make everything better:

Robert Maggi, DDTC chief, agreed with many of the complaints, and promised that improvement is at hand. A computer-based system called D-Trade should speed up and increase consistency in the licensing process, Maggi told an audience of defense company representatives and congressional staffers Sept. 22.

Although the D-Trade system has been in operation for more than two years, it is only gradually making a dent in DDTC’s workload, Maggi said.

By Christmas, D-Trade will have processed about 7,000 arms export license applications. That’s out of about 70,000 the directorate receives each year, he said.

The system has developed “way more slowly” than expected, Maggi conceded, but “I’m pretty optimistic” it will improve the licensing process.

Mr. Maggi admits that almost three years in D-Trade, only 10 percent of all license applications are filed through the system. This should be considered an admission that D-Trade, by any conceivable measure, is an abject failure. Rather than continuing to “happy-talk” the system and hope that things will improve, DDTC needs to try to figure out why the system doesn’t work and why 90% of applicants, when given the choice, file their licenses on the “dead tree” forms.

I know of at least one reason many applicants don’t use D-Trade: the digital signature requirement is burdensome and unwieldy. When the procedure for obtaining digital certificates is explained to potential applicants, I know a number who have opted instead to file paper forms with old-fashioned ink signatures. In case you don’t believe that the process of getting a certificate is cumbersome, take a look at this 15-page instruction sheet provided by one of DDTC’s approved vendors of digital certificates.

What makes this all the more baffling is that there is no need for a digital certificate to sign D-Trade applications. The digital certificate verifies that the signature on the electronic document is authentic, but DDTC has never required any proof of authenticity for signatures on paper licenses. If D-Trade applications could be signed by submitting a certification letter in pdf format, I suspect that more applicants would use the system.

DDTC released today on its website a “clarification” of the off-shore procurement rules that had been requested during the April 21, 2006 meeting of DTAG. Under § 124.13 of the ITAR, DDTC can, by means of a license, authorize transfer of technical data to foreign persons for an offshore procurement of defense articles if the various conditions of that regulation are met. DTAG requested clarification as to whether a license applicant was required to submit with the DSP-5 the procurement contract with the foreign party.

The DDTC’s “clarification” of DTAG’s question simply cites subsection (d) of § 124.13, which clearly answers DTAG’s question. Under subsection (d) that contract is submitted “at the time that it is accepted” which would be normally after the DSP-5 is granted. Indeed, it is hard to see how the parties could enter into an overseas procurement agreement for a defense article without some disclosure of technical data relating to that defense article. Thus it seems obvious — at least to me — that the license needs to precede the procurement contract.