The government and official use exemption

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1. The rules bend at the top

Before turning to the government exemption, the regulations give senior officials two general powers. The Deputy Assistant Secretary for Defense Trade Controls may order the temporary suspension or modification of any or all of the regulations in the interest of the security and foreign policy of the United States (22 CFR 126.2). The same official may make an exception to any provision "In a case of exceptional or undue hardship, or when it is otherwise in the interest of the United States Government" (22 CFR 126.3).

Neither power is an exemption a company can claim for itself. Both are decisions by the Department of State. The exemption that follows is different: it applies by its own terms when the conditions are met.

2. Transfers made by a government agency

Some government transfers need no license at all. The exemption covers an export, reexport, retransfer or temporary import of a defense article, or a defense service, made by a government department or agency for one of four purposes (22 CFR 126.4(a)).

• Official use by a government department or agency.
• A cooperative project, program or activity under a binding international agreement, or an arrangement with international partners authorized by Title 10 or Title 22 or a defense authorization act.
• A foreign assistance or sales program authorized by law and subject to control by the President by other means.
• Any other Defense Department security cooperation program or activity authorized by law and subject to control by the President by other means.

The third purpose is the one that covers government-to-government sales and grants generally. The narrower exemption for articles sold under an FMS case, and the paperwork that goes with it, is described in export licenses and customs clearance.

3. Contractors working for the government

Official use includes use by government employees acting in their official capacity. It can also include contractors using a defense article or performing a defense service within the scope of their contract. That applies in three situations: inside a government-controlled facility, where a government employee is empowered and responsible to prevent diversion and misuse, or where the Deputy Assistant Secretary authorizes it at an agency’s request (22 CFR 126.4(a)(1)(ii)). That contractor route may not be used to release technical data to a person or entity of a proscribed country.

A private company can also rely on the exemption when acting for an agency. No license is needed for an export made by another person for a department or agency, if it goes to the agency at its request. The same applies to an export to a third party at the agency’s written direction or under an international agreement, for an activity the agency itself is authorized to carry out (22 CFR 126.4(b)).

4. What the exemption does not do

The exemption has firm limits. It does not apply where an agency simply carries goods for a private firm. It "does not apply when a U.S. Government department or agency acts as a transmittal agent on behalf of a private individual or firm, either as a convenience or in satisfaction of security requirements" (22 CFR 126.4(a)(6)).

It is also an exemption from these regulations only. It is not any other approval that may be needed before a transfer, and it does not satisfy other obligations of law, regulation or government process. The regulation gives one example: exports of missile technology annex items still receive the case-by-case review the missile technology guidelines call for (22 CFR 126.4(a)(5)).

Nor does it permit an export that is otherwise prohibited by statute or regulation, or inconsistent with American arms embargoes or United Nations Security Council resolutions (22 CFR 126.4(d)).

5. Security cooperation defined for this purpose

The fourth purpose rests on a definition. Security cooperation programs and activities of the Defense Department means any program, activity or interaction with a foreign country’s security establishment to do one of three things (22 CFR 126.4(a)(4)(i)). It may build and develop allied and friendly security capabilities for self-defense and multinational operations. It may provide the armed forces with access to the country in peacetime or a contingency. Or it may build relationships that promote specific American security interests.

That breadth carries a condition. Under this purpose the government must obtain appropriate end-use and retransfer assurances from the foreign party, and make sure the recipient knows it may not change the end-use or end-user without approval (22 CFR 126.4(a)(4)(ii)).

6. Filing, return and later changes

Exempt does not mean unrecorded. Unless the goods travel by diplomatic pouch or government aircraft, vehicle or vessel, an Electronic Export Information filing must be made with Customs and Border Protection at the time of export (22 CFR 126.4(e)).

Articles can come home under the same exemption. No license is needed to return an article exported under this section, and not since reexported or retransferred other than under it, to a government agency or to the person who exported it (22 CFR 126.4(c)).

Changes after export are controlled. "Any change in end-use or end-user of a defense article, to any party or use not authorized by this section, requires approval of the Directorate of Defense Trade Controls through a license or other approval" (22 CFR 126.4(f)). That rule does not apply to articles exported for official use or under a foreign assistance or sales program, where those programs’ own terms govern (22 CFR 126.4(a)(7)).

7. What this means for a contractor

A contractor supporting a government program may be able to move equipment or perform services without a license. It must still be able to show which purpose applies, that the work sits within its contract, and that the agency, not the company, is the party making or directing the transfer. Convenience shipping by an agency does not qualify. Other exemptions, for close allies, are covered in streamlined pathways for close allies.

Key terms

Official use	Use by a government agency, its employees, or contractors within scope under set safeguards.
Transmittal agent	An agency carrying goods for a private firm, a case the exemption excludes.
Security cooperation	For this exemption, Defense programs with a foreign security establishment for capability, access or relationships.
Section 126.3 exception	A discretionary exception by the Deputy Assistant Secretary for hardship or government interest.

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

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