Filing and ending a defense services agreement

← All Insights

1. Approval is the start of the paperwork

Approval of a manufacturing license or technical assistance agreement allows the parties to sign. It does not end the American party’s obligations to the Directorate of Defense Trade Controls. The regulations set notices for the moment the agreement is signed, for a decision not to sign, and for its end. What an agreement is, and what the application must contain, is covered in what a defense services agreement is.

2. Filing the signed agreement

The American party "must file one copy of the concluded agreement with the Directorate of Defense Trade Controls not later than 30 days after it enters into force" (22 CFR 124.4(a)). If the agreement has not been concluded within one year of approval, the Directorate must be told in writing and kept informed until it is either filed or abandoned.

Production abroad carries an additional statement. Where a concluded agreement involves coproduction or licensed production outside the United States of American-origin defense articles, the filing must be accompanied by a written statement covering four matters (22 CFR 124.4(b)).

• The foreign countries, international organization or foreign firms involved.
• A description, estimated value and estimated quantity of the articles authorized to be produced.
• Any restrictions on third-party transfers of the foreign-made articles.
• Where the agreement does not give the United States access to verify quantities produced and their disposition, the alternative measures that will ensure compliance.

3. Deciding not to proceed, and ending an agreement

An approved agreement that is never signed still needs closing out. If the American party decides not to conclude it, the Directorate must be told. "The information must be provided within 60 days of the date of the decision" (22 CFR 124.5). The duty applies only where the Directorate’s approval to conclude the agreement was obtained.

The end of an agreement is notified in advance, not after the fact. The American party "must inform the Directorate of Defense Trade Controls in writing of the impending termination of the agreement not less than 30 days prior to the expiration date of such agreement" (22 CFR 124.6).

4. Clauses that outlive the agreement

Every manufacturing license and technical assistance agreement must carry six prescribed statements (22 CFR 124.8(a)). They provide that the agreement does not enter into force, and is not amended or extended, without the Department of State’s prior written approval. They subject the agreement to United States export laws and to administrative acts under them, and preserve obligations under earlier government contracts. They exclude government liability for patent infringement arising from the approval.

Two of the statements matter most after signature. Technical data, services and anything produced from them may not be transferred to a foreign person except as the regulations or the agreement specifically allow, or with prior written approval. And the provisions referring to the United States government remain binding on the parties after the agreement ends (22 CFR 124.8(a)).

5. Extra clauses for manufacturing licenses

A manufacturing license agreement carries further clauses (22 CFR 124.9(a)). Sales outside the licensed territory need prior written government approval, and sales inside it are limited to the governments there and private entities buying under contract with them. Where the United States government buys the licensed article, the licensee may not charge for patent rights or data the government already holds. Royalties are capped at what the government would have paid the licensor directly, and technical assistance charges are reduced in proportion to the government’s own contribution to development.

The licensed production is also reported. An annual report of sales and other transfers, by quantity, type, dollar value and recipient, goes to the Department of State, and the clause must say which party files it. "Reports shall be deemed proprietary information by the Department of State and will not be disclosed to unauthorized persons" (22 CFR 124.9(a)(5)). The licensee must also put the standard control statement on contracts or invoices whenever the licensed articles are transferred.

For significant military equipment, two further clauses apply: a nontransfer and use certificate executed by the foreign end-user before any transfer, and prior government approval before any commitment to transfer outside the approved territory (22 CFR 124.9(b)).

6. End-use certificates and their timing

An agreement that relates to significant military equipment or classified articles, including classified technical data, needs a Form DSP-83 nontransfer and use certificate, which the applicant and the foreign party both sign. Where classified articles are involved, an authorized representative of the foreign government must also sign it or give the same assurances by diplomatic note, unless the Directorate grants an exception (22 CFR 124.10(a)). The Directorate may require a certificate for other agreements too.

The timing rule is firm. An agreement signed by all parties before submission may only be submitted with any required certificate or note. One not yet signed must have them submitted with the signed agreement (22 CFR 124.10(b)). "In no case may a transfer occur before a required DSP-83 and/or diplomatic note has been submitted to the Directorate of Defense Trade Controls" (22 CFR 124.10(b)).

7. Congressional certification of agreements

Some agreements go to Congress before approval under section 36(d) of the Arms Export Control Act. Certification is required for an agreement "for the manufacturing abroad of any item of significant military equipment that is entered into with any country regardless of dollar value" (22 CFR 124.11(a)). An agreement that provides for the export of major defense equipment also needs certification when it meets the commercial export thresholds.

The waiting periods match those for commercial licenses. Approval waits 15 calendar days from receipt of the certification where the partner is NATO or one of five named allies, and 30 days for any other country, unless an emergency requires immediate approval. A joint resolution of Congress prohibiting the export blocks approval (22 CFR 124.11(b)). The commercial thresholds are described in congressional certification and general exemptions.

Key terms

Concluded agreement	An approved agreement signed by the parties, which must be filed within 30 days of entry into force.
Coproduction statement	The written statement filed with an agreement for licensed production of American-origin articles abroad.
Diplomatic note	A foreign government’s written assurance that may stand in for its signature on the end-use certificate.
Section 36(d) certification	The notice to Congress required before approving certain manufacturing and assistance agreements.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

How Sentfore supports this

Licensed production and support abroad depend on people and material moving safely. Sentfore works at the delivery end of defense programs in difficult environments, providing secure movement, protective security, facilities and life support. Requirements can be sent through the contact page.