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DDTC Issues Revised Guidance on Authorization Requests for the Furnishing of Defense Services by US Persons Abroad

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On September 3, 2024, the US Department of State’s Directorate of Defense Trade Controls (“DDTC”) issued revised Guidance for U.S. Persons Abroad (“USPABs”) Authorization Requests (“USPAB Guidance”) and updated FAQs on Defense Services and USPABs. Under the International Traffic in Arms Regulations (“ITAR”), all USPABs need DDTC authorization before they can furnish ITAR-controlled defense services to any foreign person, including USPABs’ non-US employers.

The principal changes to the USPAB Guidance are as follows:

  • Clarification that authorization specific to each recipient of defense services is needed, including when providing defense services on behalf of a non-US employer to other non-US third parties, such as vendors, subcontractors, and actual or potential customers, noting that authorization for multiple recipients can be grouped into the same request
  • A requirement for an increased level of specificity in authorization requests submitted to DDTC when describing the scope of defense services for which authorization is sought and the end-use systems or platforms to which those services will relate
    • DDTC notes that authorizations are limited to the specific defense articles, programs, and platforms identified in the USPAB authorization request and that DDTC will not authorize activities related to broad or vague references to defense articles, e.g., a “family of systems,” “X-series,” a “fleet of aircraft,” or “other armored vehicles.”
    • Applicants are instructed to inform DDTC of the end-use systems (e.g., remote weapons system) and platforms (armored vehicle) that will incorporate the defense article for which the defense services are to be provided.
    • DDTC also notes that there may be some initial leeway in granting USPAB authorization requests to furnish defense services related to defense articles in a developmental/prototype phase where the article’s classification on the US Munitions List (“USML”) has not yet been determined. However, once the defense article moves beyond that phase, the USPAB must submit a new, replacement request that identifies the defense article involved by its specific designation as well as the intended end-use systems and/or platforms.
  • A requirement that all documents be submitted in text-searchable PDF format
  • A requirement to include contact information for any third parties assisting with the application process
  • A more detailed end-use statement on the application (Form DS-6004)
  • Addition of a new Part 5 with specific application instructions for activities in support of space launch campaigns, including the fact that each launch campaign must be the subject of a separate USPAB authorization request
  • Changes to the USPAB Submission Letter Template, including a modified Statement of Understanding to acknowledge that changes in end-use platforms are considered changes in scope requiring separate authorization
  • Inclusion of a new Table 1 listing the defense service subcategory for each USML Category of defense articles for ease of reference when preparing the more detailed information now required in a USPAB authorization request
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Mr. McMillan's practice involves compliance counseling; compliance programs; licensing; compliance reviews; internal investigations; voluntary disclosures; administrative enforcement actions; criminal investigations; customs inquiries, audits, detentions, and seizures; and trade-compliance due diligence and post-acquisition integration in mergers and acquisitions. His practice includes matters that implicate the US International Traffic in Arms Regulations (ITAR), US Export Administration Regulations (EAR), US National Industrial Security Program (NISP), the US Committee on Foreign Investment in the United States (CFIUS), and equivalent non-US laws. Mr. McMillan regularly advises on and represents clients in matters involving technology, including its control, protection, accidental disclosure, diversion, or unauthorized collection. Mr. McMillan has extensive experience working with companies in the aerospace and defense industry, as well as companies in the Middle East and other parts of Asia.

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Alex advises clients on compliance with US export controls, trade and economic sanctions, export controls (Export Administration Regulations (EAR); International Traffic in Arms Regulations (ITAR)) and antiboycott controls. He counsels on and prepares filings to submit to the US Government's Committee on Foreign Investment in the United States (CFIUS) with respect to the acquisition of US enterprises by non-US interests. Moreover, Alex advises US and non-US companies in the context of licensing, enforcement actions, internal investigations, compliance audits, mergers and acquisitions and other cross-border transactions, and the design, implementation, and administration of compliance programs. He has negotiated enforcement settlements related to both US sanctions and the EAR.

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Michael Amberg is a US-qualified senior associate in the International Commercial & Trade Practice Group in Baker McKenzie’s London office. Michael helps clients navigate and comply with sanctions, export controls and national security controls on foreign investment (CFIUS). He also has experience in complex litigation and international commercial arbitration and has assisted clients with internal investigations and compliance related to trade, anti-money laundering, and anti-corruption matters. Previously located in Silicon Valley, he has advised clients in numerous sectors, including technology (hardware and software), energy, banking and finance, private equity, construction, transportation, biotech and medical devices, and consumer goods and retail.

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