What a defense services agreement is

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1. Services need approval as well as hardware

Export control is usually pictured as boxes crossing a border. The regulations also control help. A defense service includes furnishing assistance, including training, to foreign persons in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles (22 CFR 120.32(a)(1)). It also covers furnishing controlled technical data to foreign persons, and military training of foreign units and forces, whether in the United States or abroad (22 CFR 120.32(a)(2) and 22 CFR 120.32(a)(3)).

Such services need approval in advance. "The approval of the Directorate of Defense Trade Controls must be obtained before the defense services described in § 120.32 of this subchapter may be furnished" (22 CFR 124.1(a)). The normal vehicle is an agreement, submitted by the American party for approval.

2. The agreement types

The regulation names four kinds: manufacturing license agreements, technical assistance agreements, distribution agreements and off-shore procurement agreements. None may enter into force without the Directorate’s prior written approval. Once approved, the services described may generally be provided without further licensing (22 CFR 124.1(a)).

The requirement does not depend on whether controlled data changes hands. It applies even where all the information relied on is in the public domain or otherwise exempt (22 CFR 124.1(a)). "This requirement also applies to the training of any foreign military forces, regular and irregular, in the use of defense articles" (22 CFR 124.1(a)). Training of that kind needs a technical assistance agreement. Only in exceptional cases, on written request, will the Directorate consider approving a defense service through a license under part 125 instead.

3. What the approval covers

An approval is limited to what was described. Unless a condition in the agreement says otherwise, an authorized export, reexport, retransfer or temporary import covers the items, end-uses and parties described in the agreement, the license and any letters of explanation (22 CFR 124.1(e)). The Directorate approves in reliance on the representations the applicant made in those documents.

Changes follow the same route. Changes to scope, including modifications, upgrades or extensions, must be submitted and may not enter into force until approved (22 CFR 124.1(c)). Minor amendments that only alter delivery or performance schedules, or are purely administrative, need not be submitted for approval. A copy of each must still be filed with the Directorate within thirty days after it is concluded (22 CFR 124.1(d)). Copies of approved agreements that release classified articles are sent to the Defense Security Service (22 CFR 124.1(b)).

4. Technical data under an approved agreement

An approved agreement also carries its technical data. Customs and Border Protection or postal authorities permit export of unclassified technical data without a license if it furthers an approved manufacturing license or technical assistance agreement and stays within the agreement’s scope (22 CFR 124.3(a)). "The approval of the DDTC must be obtained for the export of any unclassified technical data that may exceed the terms of the agreement" (22 CFR 124.3(a)).

Classified information can move under an agreement that provides for it without further approval on two conditions. The American party must certify to the Defense Department transmittal authority that the information stays within the technical or product limits of the agreement. It must also follow the industrial security manual’s transmission rules, together with any other agency requirements (22 CFR 124.3(b)).

5. What every agreement must say

Four items must appear in every proposed manufacturing license or technical assistance agreement, in terms as precise as possible (22 CFR 124.7(a)).

• The defense article to be manufactured and every defense article to be exported, including test and support equipment, described by nomenclature, contract number, National Stock Number or other specific data.
• The assistance and technical data to be furnished, including design and manufacturing know-how, and any manufacturing rights granted.
• The duration of the agreement.
• The countries or areas in which manufacture, production, processing, sale or other transfer is licensed.

The first item has a practical effect. "Only defense articles listed in the agreement will be eligible for export under the exemption in § 123.16(b)(1) of this subchapter" (22 CFR 124.7(a)(1)). An applicant who thinks a required clause is irrelevant may ask to omit it, giving reasons in the transmittal letter.

6. The transmittal letter

An application to approve an agreement with a foreign person "must be accompanied by an explanatory letter" (22 CFR 124.12(a)). The letter gives the applicant’s registration number and identifies the licensee and the scope. It names the government contract under which the equipment or data was developed, the security classification, and any patent application covered by a secrecy order. It also states whether foreign military sales credits or loan guarantees are involved in financing (22 CFR 124.12(a)).

Value triggers a further disclosure. The letter must state the actual or estimated value of the agreement, including the defense articles to be exported under it. "If the value is $500,000 or more, an additional statement must be made regarding the payment of political contributions, fees or commissions, pursuant to part 130 of this subchapter" (22 CFR 124.12(a)(6)).

Four prescribed statements follow (22 CFR 124.12(b)). The applicant acknowledges that approval does not pass on antitrust legality or on the business terms. It undertakes that the agreement will not enter into force before approval, that a signed copy will follow within 30 days of conclusion, and that any sub-licensing will carry the government clauses of the basic agreement.

7. What this means for a supplier

Any contract that has American engineers helping a foreign partner build, repair, integrate or operate defense equipment is likely to need an approved agreement before work starts. Training foreign forces falls within the rule even where no controlled data is shared. What happens after approval, including filing, non-conclusion and termination notices, is covered in filing and ending a defense services agreement.

Key terms

Defense service	Assistance, training or technical data furnished to foreign persons concerning defense articles.
Technical assistance agreement	An approved agreement for furnishing defense services, required for training foreign forces.
Manufacturing license agreement	An approved agreement granting a foreign person rights to manufacture a defense article.
Transmittal letter	The explanatory letter that must accompany an application to approve an agreement.

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

Teams delivering technical assistance abroad often work where security and logistics are the hard part. 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.