C3.3.1. International Traffic in Arms Regulations (ITAR) Requirements. DoS policies and procedures for the permanent export of items on the U.S. Munitions List (USML), purchased under the FMS program, are set forth in the ITAR. Export of USML items, including certain services and technical information, requires a license unless it is done via FMS. The Defense Technology Security Administration (DTSA) researches and validates license applications for DoD.

C3.3.2. ITAR Exemptions. The ITAR includes many exemptions from the licensing requirements. Some are self-executing by the contractor who is to use them and normally are based on prior authorizations. Other exemptions, such as the exemption in 22 CFR 125.4(b)(1), may be requested or directed by the DoD Component. Only a PDA or DDA has the authority to exercise certain of these exemptions in compliance with the National Industrial Security Program Operating Manual (NISPOM), DoD 5220.22-M. For an exemption to be used for follow-on support by a contractor, the LOA and the contract must be specific regarding the exporter, the specific service or information to be provided, any sub-contractors involved, intermediate consignees, the end-use, and the end-user. Failure to fully document this information may result in program delays and requirements for obtaining additional export authorizations by the supporting contractor.

C3.3.3. DoD-Sponsored Shipments of FMS Materiel.

C3.3.3.1. Export Requirements for DoD-Sponsored Shipments. A DSP Form 94 is required, in addition to the LOA, pursuant to ITAR, Part 126.6(c)(6)(ii). When classified material is involved, a Transportation Plan is required in accordance with ITAR, Part 126.6(c)(6)(iii). See Chapter 7 for procedures. Exports of FMS materiel through the Defense Transportation System (DTS) requires entry of the electronic export information (EEI) into the Automated Export System (AES)” should replace If a continental United States (CONUS)-located shipping activity offers FMS shipments directly to commercial air carriers for lift to a purchaser's country, it may be necessary for the shipper to prepare an EEI to enable the materiel to depart CONUS. (Item 16 in the EEI must contain "M"s to identify the materiel as FMS exports. The Census Bureau maintains a web page and customer assistance phone number to assist shippers with EEI preparation.)

C3.3.3.2. Overseas Customs Clearance Requirements for DoD-Sponsored Shipments. The purchaser is responsible for obtaining overseas customs clearances and for all actions and costs associated with customs clearances for deliveries of FMS materiel using DTS, including any intermediate stops or transfer points.

C3.3.3.3. Reporting of FMS Export Shipments for DoD-Sponsored Shipments. All USG and DoD-sponsored shipments of FMS export materiel moving overseas within DTS are reported monthly to the Foreign Trade Division, Bureau of Census, Department of Commerce (DoC), by the IA sponsoring the sale. The Census Bureau Shipment Report (CBSR) assures compliance with conditions under which exemptions are granted and satisfies the export data requirements of the U.S. Department of Commerce.

C3.3.3.4. Purchaser-Sponsored Shipments of FMS Materiel.

C3.3.3.4.1. Export License Requirements for Purchaser-Sponsored Shipments. An export license is not required when FMS materiel is transferred to the purchaser within the United States; however, ITAR Form DSP-94, accompanied by a signed and implemented LOA, including all Amendments or Modifications, must be used to export these shipments and lodged at a U.S. Customs Port. Further detail is in Table C7.T1. outlines responsibilities for FMS purchasers and FMS freight forwarders. To use a DSP-94, a freight forwarder must: be registered with the DoS, Directorate of Defense Trade Controls (DDTC); file a letter with DDTC from the foreign embassy or government appointing it as a forwarding agent for that government's shipments; file a statement with DDTC assuming full responsibility for compliance with the ITAR; and if it is to handle classified consignments, have a Facility Security Clearance (FCL) issued by the Defense Security Service (DSS) and U.S. citizen personnel with the required security clearance. If a foreign purchaser acts as its own freight forwarder, it must register with DDTC and file a statement that it will comply with the ITAR. If the materiel involves classified articles or data, a Transportation Plan is required. See 22 CFR 126.6 and Chapter 7 for requirements.

C3.3.3.4.2. U.S. Customs Clearance Requirements for Purchaser-Sponsored Shipments. The purchaser or its designated FMS freight forwarder must obtain Customs clearances for FMS materiel exported from the United States. The purchaser's representative or freight forwarder prepares Electronic Export Information (EEI) using the Automated Export System (AES). EEIs must be filed with and authenticated by U.S. Customs and Border Protection (CBP) at the primary port of exit. Laws and regulations concerning export declarations are found on the DDTC web page, AES Direct web site, and in 22 CFR 123.9, 123.22, 123.25, and 126.6. All exports of FMS materiel from the U.S. must be reported to the U.S. DoC, as required by current Federal statutes or regulations.

C3.3.3.4.3. Overseas Customs Clearance Requirements for Purchaser-Sponsored Shipments. The purchaser is responsible for all actions and costs associated with obtaining overseas customs clearances for deliveries of FMS materiel to a purchaser's port of discharge (including delivery to third countries) using commercial means.

C3.3.3.4.4. Purchaser-Sponsored Shipments of Classified FMS Materiel. If a purchasing country proposes to take possession of classified defense articles purchased under the FMS program within the United States, it must obtain an export authorization . (DSP-94).

C3.3.3.4.4.1. Transportation Plan for Purchaser-Sponsored Shipments. The LOA must contain the requirement for, and describe the specific responsibilities for preparing, the Transportation Plan. The Transportation Plan must provide a specific description of the transfer arrangements and nationality of freight forwarders and carriers to be used, all of which shall be consistent with DoDM 5200.01 Vol. 1, DTM-04-009, DTM-04-010, and DoD 5220.22-M, Supplement 1. A Transportation Plan is required for the use of any carrier, whether commercial or DTS. The Transportation Plan must be approved by the IA before delivery of the material. A detailed description and standardized format are available in Chapter 7.

C3.3.3.4.4.2. Foreign Government Representative. Classified materiel may be released only to a person who has been designated by the purchasing government in writing as its Designated Government Representative (DGR) or as its transfer agent (e.g., a cleared freight forwarder) that is used for onward movement to the point where custody of the shipment is assumed by the Government’s DGR. The Military Assistance Program Address Directory (MAPAD) must be consulted for the verification of freight forwarders that have been approved to handle classified shipments. The identity of the transfer agent, carrier, and DGR is included in the Transportation Plan or in the Notice of Availability (NOA) (DD 1348-5) for individual shipments as identified in Chapter 7. An NOA for classified material is sent to notify a purchaser’s representative, as listed in the MAPAD, that classified material is ready for shipment. The purpose of the NOA is to delay release of materiel requiring special receipt and export processing. Each entity that has custody of a classified shipment shall be required to sign for the shipment in accordance with the NISPOM (paragraph 10-406).

C3.3.4. Temporary Imports. When it is known at the time of LOA negotiation that items will be returned to the United States for any purpose, including maintenance, overhaul, repair, or other follow-on support, the LOA, contract, and original Transportation Plan must provide for the return shipment or other support, consistent with Chapter 7.

C3.3.4.1. Temporary Import of Unclassified Defense Articles. A Temporary Import License, ITAR Form DSP-61 is required for the import and re-export from the United States of unclassified defense articles that are not otherwise exempted by 22 CFR Part 123.4.

C3.3.4.2. Temporary Import of Classified Defense Articles. ITAR Form DSP-85 is required for any import and re-export from the United States of classified defense articles being temporarily imported into the United States.

C3.3.4.3. Temporary Import of Offshore Procurements. Materiel procured outside of the United States under USG and DoD procurement actions for the FMS program must be imported and exported under a DSP-61 if it passes through the United States en route to the purchasing country unless an exception under 22 CFR Part 123.4 applies. (There are additional exceptions for Canada and Mexico under 22 CFR Parts 123.19 and 126.5.) The DSP-61, filed by the purchaser or its agent, is required whether the materiel is imported or exported intact, or is incorporated into another defense article that is subsequently exported to the purchasing country.

C3.3.4.4. Temporary Import of Defense Articles for Repair. Articles temporarily imported into the United States for overhaul, repair, modification, calibration, etc., are subject to the DDTC license approval requirements listed in 22 CFR Part 123.1 unless the temporary import and subsequent re-export qualifies for an exemption pursuant to 22 CFR Part 123.4. When it is anticipated that FMS-origin unclassified articles will be returned to the United States for overhaul, repair, calibration, or modification, the import requirements should be included in the LOA for the original sale. For classified FMS-origin materiel the requirements should be included in the Transportation Plan, the LOA, or both. The FMS purchaser or its agent is responsible for filing documentation with U.S. CBP upon entry of the FMS-origin materiel into the United States (on temporary import basis) for Repair and Return. The entry documentation must contain the statement,

A complete list and description of the defense articles being imported must be included. The description includes quantity and value in U.S. dollars. When the materiel is subsequently re-exported, the purchaser or its agent must submit EEI., using AES Direct, to CBP that identifies 22 CFR Part 123.4 as the authority for the export and provide, as requested by CBP, the entry document number or a copy of the CBP document under which the FMS-origin defense article was imported on a temporary basis for Repair and Return. This requirement applies to both FMS customer-arranged shipments and shipments made through the DTS. IAs preparing FMS LOAs for Repair and Return programs should include a LOA note indicating the requirement for the foreign country to report imports and exports made under the LOA to CBP. See Appendix 6 on LOA Notes.

C3.3.4.5. Temporary Imports of Defense Articles without Subsequent Export of the Same Article. Under 22 CFR Part 123.4(b), a license is not required for the temporary import (but not the subsequent export) of unclassified defense articles that are to be incorporated into another article or modified, enhanced, upgraded, altered, improved or serviced in any other manner that changes the basic performance or productivity of the article. A DSP-5 is required for the re-export of these enhanced defense articles unless FMS exceptions apply.

C3.3.5. Permanent Imports. The Department of Justice, Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE), regulates the permanent import of defense articles, as listed in the 27 CFR Part 447, United States Munitions Import List (based on the USML), pursuant to the AECA and implementing federal regulations. Permanent imports of defense articles into the U.S. require an approved BATFE Form 6 in accordance with 27 CFR Part 447. See http://www.atf.gov for more information.

C3.3.6. Contractor Proposals and Presentations. Policy and procedures for DoS approval regarding sales proposals or presentations of Significant Military Equipment (SME) are in 22 CFR Part 126.8. These requirements do not apply to SME that has been approved for sale under FMS.

C3.3.6.1. Export License Requirement. If marketing efforts involve the disclosure of technical data or temporary export of defense articles, the contractor must obtain the appropriate export license.

C3.3.6.2. Prior Approval for Contractor Presentations and Proposals. DoS approval must be obtained before any marketing efforts for sales that meet ALL of the following criteria: SME valued at $14 million or more; end-use by foreign armed forces other than NATO countries, Australia, Japan, South Korea, Israel, or New Zealand; export of any defense article or the furnishing abroad of any defense service including technical data; and identical SME has not been previously licensed for permanent export or approved for sale under the FMS program. This prior approval permits the contractor to conduct unclassified discussions and propose a sale of a specific item of SME to a particular country.

C3.3.6.3. Advance Notification for Contractor Presentations and Proposals. When the identical equipment meets the first three conditions in Section C3.3.6.2. and has not been previously licensed for permanent export or approved for sale under the FMS program to any foreign country, the contractor must notify the DoS in writing at least 30 days in advance of the proposal or presentation.

C3.3.6.4. Prior Approval for Manufacturing License Agreements (MLA) and Technical Assistance Agreements (TAA). Prior approval must be obtained for all proposals to enter into a MLA or TAA with a foreign country for the production or assembly of SME. An MLA or TAA is not required during the period in which the FMS case and implementing USG FMS contracts and subcontracts are in effect if the LOA and the contract contain all of the information normally required by a license; e.g. identification of exporter, specific service or information to be exported, intermediate consignees, end-use, and end-user. Under 22 CFR Part 126.6, the LOA and the implementing contracts serve as the authorization for the transfers without a license, provided the transaction is fully documented.