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C8.7.1. In accordance with the FAA, Section 505 (22 U.S.C. 2314); AECA section 3 (22 U.S.C. 2753); and LOA Standard Terms and Conditions, foreign governments may not transfer title to or possession of any defense articles or services to anyone not an officer, employee, or agent of that country or of the USG until the country receives prior written consent from the USG. Nor may the foreign government use or permit the use of such articles or services for purposes other than for which they were furnished unless the foreign government receives prior written consent from the USG. SCOs should be aware of the pertinent agreements with the recipient country including any special diplomatic notes or agreements that apply to the defense articles involved. SCOs should contact their country program director to ensure that they have all pertinent agreements.
C8.7.2. Third Party Transfer Responsibilities.
C220.127.116.11. Department of State. The DoS is responsible for authorizing third party transfers of U.S.-origin defense articles and/or services worldwide.
C18.104.22.168.1. Office of Regional Security and Arms Transfer Policy (PM/RSAT). DoS (PM/RSAT) is responsible for coordinating the DoS response requests for the transfer of defense articles to a third party, including all associated components, technical data, training, and services originally acquired via FMS or grant programs (e.g., FMF, P.L. 109-163, Section 1206 (as extended), Military Assistance Program (MAP), Excess Defense Articles (EDA), Drawdown) and requests for the demilitarization and disposal of the items. See the DoS web page at www.state.gov/t/pm/rsat/c14025.htm for additional information.
C22.214.171.124.2. Directorate of Defense Trade Controls (PM/DDTC). Pursuant to AECA, section 38 (22 U.S.C. 2738) and the International Traffic In Arms Regulation (ITAR) (22 C.F.R. 120-130),, DoS (PM/DDTC) is responsible for processing third party requests to transfer defense articles or services originally acquired under a commercial export license or other commercial authorization (such as manufacturing license or technical assistance agreements). DoS (PM/DDTC) also authorizes temporary imports of defense articles into the United States.
C126.96.36.199. Department of Justice (DoJ). The Department of Justice's Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE) is responsible for control of the permanent import of U.S. Munitions List (USML) (22 C.F.R. 121.1) items into the United States. DoS approval of a retransfer request by a foreign government must precede and be separate from submission by the importer of an ATF Form 6 import license application to BATFE.
C188.8.131.52. Security Cooperation Organizations (SCOs). SCOs are directly involved only in actions related to retransfers of items received through DoD-administered programs. They do not process requests for retransfers of defense articles procured by commercial means. Owning countries make such requests directly to the Department of State's Directorate of Defense Trade Controls through their embassies in Washington, D.C.
C8.7.3. Third Party Transfers Requests: Government-To-Government. The USG may consent to a third party (government) transfer if the USG would directly transfer the articles to the proposed recipient. The divesting government or international organization submits a written third party Government transfer request to the USG for consideration. The request is sent to the SCO and/or Country Team, which in-turn sends the request to DoS (PM/RSAT) with information copies to DSCA and the SCO of the proposed third party recipient country. The divesting government or international organization may also send the request directly to DoS (PM/RSAT). All transfer requests must include a signed cover letter, a completed Standard Questionnaire, and end-use, retransfer, and security assurances from the proposed recipient unless a member of the Blanket End-Use Assurance Program (Sections C184.108.40.206. and C220.127.116.11.) The information required for the Standard Questionnaire is provided in Table C8.T7. See www.state.gov/t/pm/rsat/c14031.htm for step-by-step instructions and an example of a completed questionnaire.
The name of the divesting government.
A clear description of the articles, services, technical data, or training being transferred including quantity, model, any associated equipment, spare parts and/or classified components or data. Also, where possible, indicate whether equipment is Significant Military Equipment (SME) or non-SME and the category under which the article is listed in the USML. Serial numbers must be provided for SME.
The original acquisition source of the defense articles, services, technical data, or training proposed for transfer (e.g., FMS, grant, pseudo case transfer, etc.). The case identifier must be provided for FMS or an explanation as to why it is unavailable.
The year of original acquisition.
The original acquisition cost or best estimate of that cost.
The current value if available.
The reason the government wants to divest itself of the articles, services, technical data, or training. If by demilitarization and disposal, describe how it will be accomplished.
The proposed recipient.
Indicate whether the transfer is temporary or permanent.
If known, the proposed end-use of the articles, services, technical data, or training by the proposed recipient.
Indicate whether the recipient has the defense article proposed for transfer in its inventory.
Estimation of net proceeds. In accordance with FAA, section 505(f) and prerequisite bilateral agreements, if the defense articles were furnished to a country on a grant basis (e.g., MAP-grants, grant EDA), the net proceeds of the sale of the defense articles received by the grantee must be returned to the USG. The following factors relating to the defense articles should be considered in determining the net proceeds: the value of the defense articles when furnished by the USG as a percentage of the aggregate of the value of the defense articles when furnished by the USG added to the value of any capital investment incurred by the grantee in repairing, rehabilitating, or modifying the article (other than routine maintenance and repair expenses); depreciation of that value; and reasonable administrative costs of the sale or disposal. The party requesting the third party transfer of such defense articles must show it has employed a reasonable methodology in calculating the net proceeds [e.g., Net Proceeds = (Gross Sale Proceeds - Administrative Costs of Sale) x (Value at Transfer / (Value at Transfer + Value of Capital Investment))].
DoS may waive return of net proceeds in cases involving grant equipment delivered prior to 1985. There is no waiver authority for articles delivered after 1985. Requests for waiver consideration are included in written transfer requests and must include an estimate of the net proceeds expected, justification/rationale for the request to retain net proceeds, and how the funds will be used.
Indicate whether an intermediary is involved in the transfer. If so, provide a description of the role (broker, freight forwarder, etc.), the business address, and a point of contact.
Proposed timeframe or time constraints with regard to DoS processing of the request. If immediate action is required, provide explanation.
The name, title, and contact details for an official in the divesting and recipient countries with whom DoS (PM/RSAT) can discuss the transfer details and required end-use, retransfer, and assurances.
C18.104.22.168. End-Use, Retransfer, and Security Assurances. The DoS requires end-use, retransfer, and security assurances from the proposed recipient's Ministry of Foreign Affairs (MFA) unless the proposed recipient is a member of the Blanket Assurance Program. See Section C8.7.5. The assurances must be obtained by the divesting government and submitted with the retransfer request. These assurances are mandatory, generally non-negotiable, and must be received by DoS before the transfer can be considered for approval. Assurances must be typed in English and signed by an official of the proposed recipient country who can legally bind the entire government (usually the MFA). If the government issues assurances signed by an official of a ministry other than the MFA, such as the Ministry of Defense, the U.S. Embassy in that country must confirm in writing that his or her signature is binding. When language is supplied that does not appear to meet U.S. requirements, it is submitted to the DoS Office of the Legal Adviser for review.
C22.214.171.124. Blanket Assurances. Governments may sign blanket end-use, retransfer, and security assurances to satisfy legislative requirements for future government-to-government retransfers. Governments that sign Blanket Assurances are not required to sign individual assurances to receive USG-origin defense articles from foreign governments. Blanket members under the Defense Trade Security Initiative (DTSI) program have the added benefit of limited advanced consent. Members can transfer between and among themselves when: the original acquisition value of all transferred articles does not exceed $7 million; classified defense articles (including classified technical information) are not being transferred; the defense articles to be transferred are already in the inventory of the proposed recipient (no first introduction); and the proposed recipient is either an approved DTSI country (NATO members, Japan, Australia, or Sweden) or a signatory to the standard blanket assurance program. DTSI assurances, like blanket assurances, apply only to government-to-government third-party transfers of USG-origin defense articles. They do not replace the DSP 83 currently used for the retransfer of defense articles originally acquired through Direct Commercial Sales (DCS). Requests for retransfer of these items continue to be reviewed on a case-by-case basis by the USG. Interested governments should contact DoS (PM/RSAT) for consideration.
C8.7.4. Third Party Transfer Requests Government-to-Non-States or Private Entities. As stated in the FAA and AECA, defense articles and defense services are transferred to foreign governments and international organizations to serve U.S. foreign policy objectives. Following the receipt of a request to transfer U.S.-origin defense articles and defense services from a foreign government or international organization, the DoS adjudicates all requests for transfer of U.S.-origin military equipment to non-states, including private entities, nongovernmental organizations, international organizations, and other non-state groups, on a case-by-case basis. In submitting a government-to-non-state transfer request, the divesting country and the SCO follow the same instructions as provided above in subparagraph C8.7.3. and Table C8.T5. For retransfers to private entities, the request should include end use, retransfer, and security assurances from the proposed private entity recipient, as well as Country Over Private Entity (COPE) assurances from the government with legal jurisdiction over the private entity. The written transfer request should include contact details for a representative of the private entity. An exception occurs when a country transfers U.S. equipment to a U.S. contractor for the purpose of refurbishment or salvage, and the name of the contractor is specifically listed in an LOA note that has been coordinated with DSCA (Programs Directorate) and the DoS. Further transfers of the equipment to a different contractor or other party must also be approved by DSCA (Programs Directorate) and the DoS.
C8.7.5. Congressional Requirements for Third Party Transfers. As provided in the FAA and the AECA, certain third party transfers of defense articles, including all associated components, technical data, training, and services originally acquired via FMS or grant programs, are subject to congressional notification and reporting requirements.
C126.96.36.199. Congressional Notification. Third party transfers of defense articles and services originally acquired via FMS or grant programs are subject to requirements for congressional certification pursuant to AECA, section 3(d) (22 U.S.C. 2753 (d)) using certification thresholds similar to those for AECA, section 36(b) (22 U.S.C. 2776(b)) notifications. See Section C5.5. A 30-day prior congressional certification is required for third-party transfer requests that involve defense articles and services with original acquisition values that fall in one of the following categories: Major Defense Equipment (MDE) with an acquisition value equal to or greater than $14M for non-North Atlantic Treaty Organization (NATO) recipients and $25M if the recipient is a member of NATO, Australia, Israel, Japan, the Republic of Korea, or New Zealand; or any other defense article or related training or defense service with an acquisition value of $50M or more for non-NATO recipients and $100M or more if the recipient is a member of NATO, Australia, Israel, Japan, the Republic of Korea, and New Zealand. For all recipients, approval is granted after the 30-day calendar day period has expired unless Congress enacts a joint resolution of disapproval.
C188.8.131.52. Transfers pursuant to arrangements among NATO members, or between NATO and any of its member countries for lead-nation procurement are exempt from AECA, section 3(d) (22 U.S.C. 2753 (d)) certification requirements if the defense article to be transferred was originally purchased from the United States, and the transferee on whose behalf the lead-nation procurement was proposed identified to Congress in a notification pursuant to AECA, section 36(b) (22 U.S.C. 2776(b)). Information as to possible subsequent transfers by a NATO member country purchasing on behalf of a third NATO party shall be provided to DSCA for inclusion in AECA, section 36(b) (22 U.S.C. 2776(b)) notifications. The certification requirement of AECA, section 3(d) (22 U.S.C. 2753 (d)) also does not apply to the following:
C184.108.40.206. Congressional Reporting. All approved third party transfers involving defense articles and services with an original acquisition value of $1 million or more are submitted in a quarterly report to Congress (AECA, section 36(a)(9)).
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