What Compliance Questions Arise When a U.S. Weapons Program Moves Overseas?

According to DFARS Subpart 227.6, foreign production can be structured through a foreign license or technical assistance agreement in which a domestic “primary source” provides a foreign “second source” with patent rights, technical assistance, data, know-how, trained personnel, jigs, dies, fixtures, or other manufacturing aids needed to produce the supply or perform the service. DFARS also states that the Government policy is not to pay for patents or data it already has a royalty-free right to use and disclose, or for material that is public domain or otherwise unrestricted. The same subpart says contracts should, to the extent practicable, specify the rights in patents, data, and other rights to be supplied to the second source, and should bar charges for royalties or amortization on covered patents, data, or technical assistance already paid for by the Government. Separately, DFARS 252.225-7048 classifies export-controlled items as EAR- or ITAR-controlled items and requires contractors to comply with applicable laws, register with the Department of State when required by the ITAR, and consult State or Commerce on compliance questions. DFARS also says the clause does not add, change, supersede, or waive Federal law, and Subpart 225.3 adds that foreign-country performance or delivery follows the stated overseas procedures.