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    What are the specific regulations, codes, or policies that preclude the USG from working with commercial partners that have received foreign investment or collaborate with other governments?


    Answer

    This is an excellent (and often asked) question which -- due to the complexity of the U.S. Government/DoD Technology Security and Foreign Disclosure (TSFD) system and USG export control laws and regulations -- does not lend itself to a simple answer.  This DAU response provides some pragmatic considerations that may help your organization (and DoD Component) strike the proper balance between obtaining valuable foreign-origin research and technology that benefits DoD while ensuring that U.S. investment in foreign companies that have received prior foreign investment or collaborated with other governments does not inadvertently cause harm to DoD's technology security and foreign disclosure interests.

    BACKGROUND

    Principle #1:  In general, there are usually no problems or restrictions if ALL of the Research and Technology (R&T) products that result from U.S investment in a private sector entity (company, partnership, university, etc.) are generated SOLELY by the entity based on foreign-origin efforts (i.e., NO US-origin 'cooperation' in the efforts, no US-origin GFI/GFX, no US origin 'steering' of the research effort, etc.).  See "Scenario A" below for possible exceptions to this 1st general principle.

    Principle #2:  If the U.S. investment in the private sector entity is solely for "BASIC RESEARCH" (aka RDT&E budget activity 6.1) there should be no problems or restrictions based on U.S. laws, regulations, and policies that govern the sharing of DoD BASIC RESEARCH products in the public domain.  Moreover, cooperation/sharing among US and foreign government and private sector scientists is permitted if the effort focuses solely on BASIC RESEARCH.  Consult your DoD Component S&T organization or OUSD/R&E for further details.

    Principle #3:  Any RDT&E efforts BEYOND Basic Research -- normally referred to as Applied Science and Technology (S&T) or APPLIED R&D -- are subject to USG/DoD TSFD approval which -- from a private sector entity perspective -- is implemented through either Commerce Department or State Department export control approvals.  Dual-use research and technology efforts are governed by the Export Administration Regulations (EAR) while Military research and technology efforts are governed by the International Traffic in Arms Regulations (ITAR).  It is the FOREIGN PRIVATE SECTOR ENTITY's responsibility to apply for and obtain appropriate USG export approvals PRIOR TO CONTRACT AWARD (or equivalent, such as Grants, OTAs, CRADA's, etc.)  Consult the DAU Defense Exportability Integration Job Support Tool (DEI JST) for overall guidance on how the USG/DoD TSFD and export control policies and processes work at URL https://www.dau.mil/tools/t/DEI-JST

    ANSWER (noting the "CAVEAT" below)

    It appears that the challenge you are facing in the SEARCH phase is that you are being asked to "screen" all potential foreign entity R&T provides, then rule out ALL entities who answer that they have benefited from foreign investment or foreign government involvement or influence.  (Note: the term of art used by the DoD security professionals for this is Foreign Ownership, Control, or Influence (FOCI)).

    This is not what the US laws, regulations, and policies described in the DEI JST actually say regarding FOCI considerations in DoD Contracting with foreign entities.  What DoD acquisition managers are supposed to do is use the USG/DoD TSFD and export control processes that exist to make RISK MANAGEMENT decisions on potential investments in foreign entity R&T work based on the three principles above while complying with the specific TSFD/export control system requirements in US laws, regulations and policies described in the DEI JST.

    ILLUSTRATIVE EXAMPLES

    Scenario A:  DoD wants to fund a foreign entity to perform an R&T effort based SOLELY on foreign-origin R&T.  All DoD provide is funding -- nothing else.  Per Principle #1, this should not be an issue.  However, the foreign entity is still obligated to comply with US export control laws and regulations, as applicable, and MAY need to obtain a Commerce or State Department export approval prior to signing the Contract (or other similar obligation) with DoD.  You, as as the DoD acquisition 'manager' -- supported by your Contracting Officer and Foreign Disclosure Officer (FDO) -- are obligated to use the correct DFARS export control clauses in the Contract (or similar mechanism), and confirm that the foreign entity has obtained any required USG export approval(s) prior to entering into the Contract.  If anything about the proposed Contract R&T effort raises TSFD risk management concerns within the USG or DOD, the export approval process will highlight these concerns and involve the appropriate USG/DoD TSFD authorities in the risk management analysis/decision making process prior to a USG export control decision.  If the risk is too high, the USG export approval will not be granted, and the Contract cannot not be awarded.  If there is some risk, but it can be mitigated by what are referred to as "export approval provisos" (restrictions), the USG export approval will be condiitional.  If there is no risk, the USG export approval will be granted without any provisos (restrictions).

    SCENARIO B:  In accordance with Principle #2,, per US law and regulation, no USG export approvals are required for Basic Research R&T efforts with foreigjn entities unless there is a specific restriction in law that prevents expenditure of DoD funding R&T efforts in a foreign nation (including its entities) or a specific entity.  (Note: this would be very unusual, but could apply to some entities in the PRC, for example).

    SCENARIO C:  In accordance with Principle #3, USG export approval will be required prior to any DoD Contract (or similar mechanism) award to a foreign entity R&T that falls within the Principle #3 area of consideration.  The USG TSFD/export control process controls and decision making process described above in the second half of the Scenario A example would apply in ALL CASES.

    CAVEAT

    This DAU response is provided "for information only."  The questioner should consult the "TSFD Organization" within their DoD Component for additional guidance regarding international contracting actvities, and obtain/comply with their Component's polices/procedures in this complex and potentially sensitive area.

     

     

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