[Federal Register: July 21, 2008 (Volume 73, Number 140)]
[Rules and Regulations]
[Page 42274-42279]

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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Parts 204, 235, and 252

RIN 0750-AF13


Defense Federal Acquisition Regulation Supplement; Export-
Controlled Items (DFARS Case 2004-D010)

AGENCY: Defense Acquisition Regulations System, Department of Defense
(DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: DoD has issued an interim rule amending the Defense Federal
Acquisition Regulation Supplement (DFARS) to address requirements for
complying with export control laws and regulations when performing DoD
contracts. The rule recognizes contractor responsibilities to comply
with existing Department of Commerce and Department of State
regulations. The rule adds two new clauses to be used when export-
controlled items, including information or technology, are expected to
be involved in the performance of a contract, or when there is a
possibility that export-controlled items, including information or
technology, may come to be involved during the period of performance of
the contract.

DATES: Effective date: July 21, 2008.
    Comment date: Comments on the interim rule should be submitted in
writing to the address shown below on or before September 19, 2008, to
be considered in the formation of the final rule.

ADDRESSES: You may submit comments, identified by DFARS Case 2004-D010,
using any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
     E-mail: [email protected] Include DFARS Case 2004-D010 in the
subject line of the message.
     Fax: 703-602-7887.
     Mail: Defense Acquisition Regulations System, Attn: Ms.
Felisha Hitt, OUSD (AT&L) DPAP (DARS), IMD 3D139, 3062 Defense
Pentagon, Washington, DC 20301-3062.
     Hand Delivery/Courier: Defense Acquisition Regulations
System, Crystal Square 4, Suite 200A, 241 18th Street, Arlington, VA
22202-3402.
    Comments received generally will be posted without change to http:/
/www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Ms. Felisha Hitt, 703-602-0310.

SUPPLEMENTARY INFORMATION:

A. Background

    DoD published a proposed rule at 70 FR 39976 on July 12, 2005, to
address requirements for preventing unauthorized disclosure of export-
controlled information and technology under DoD contracts. In
consideration of the public comments received, DoD published a second
proposed rule at 71 FR 46434 on August 14, 2006. The second proposed
rule simplified the policy framework in recognition of existing policy
found in the International Traffic in Arms Regulations (ITAR) and the
Export Administration Regulations (EAR).

[[Page 42275]]

    Section 890(a) of the National Defense Authorization Act for Fiscal
Year 2008 (Pub. L. 110-181), enacted on January 28, 2008, requires DoD
to prescribe regulations, not later than July 26, 2008, to address
requirements for DoD contractors to comply with laws and regulations
applicable to goods or technology subject to export controls. In view
of this new statutory requirement, and in consideration of the public
comments received in response to the second proposed rule, DoD has
developed an interim rule to address export controls. The differences
between the second proposed rule and this interim rule include--
     Definition and use of the term ``export-controlled items''
instead of ``export-controlled information and technology,'' to more
appropriately describe what is controlled by the ITAR and EAR and
addressed by this rule.
     Information in the definition of ``items'' with respect to
the EAR to clarify that access to an ``export-controlled item'' is not
necessarily subject to the EAR. Only technology and software source
code (and not commodities) are subject to the EAR when released to a
foreign national inside the United States.
     Relocation of the definition of ``fundamental research''
to DFARS 204.7301, because the proposed clause containing the
definition has been excluded from the interim rule.
     Addition of a definition of ``applied research'' in DFARS
204.7301, since the term is used within the definition of ``fundamental
research'' in that section. The definition of ``applied research'' is
consistent with the one found at FAR 35.001. Although the term ``basic
research'' is also used within the definition of ``fundamental
research,'' a definition of that term is not included in 204.7301,
since the term is defined in FAR 2.101 for general use throughout the
FAR system.
     Addition of references to the ITAR and the EAR in 204.7302
for clarity.
     Relocation of procedural requirements, formerly in
204.7303, Policy, to a new Procedures section at 204.7304.
     Clarification of the clause prescription at 204.7305(a)
(formerly 204.7304(a)).
     Reduction of the number of contract clauses from three to
two by eliminating the separate clause for fundamental research
contracts.
     Addition of text in the clause at 252.204-7009,
Requirements Regarding Potential Access to Export-Controlled Items, to
specify that, if during performance of the contract, the contractor
becomes aware and notifies the contracting officer that the contractor
will generate or need access to export-controlled items, the
contracting officer may, as one of three possible courses of action,
terminate the contract in whole or in part for the convenience of the
Government.
    DoD received comments from 167 persons or organizations in response
to the second proposed rule. The comments are grouped into the
following seven categories:
    1. National policy concerns.
    2. Concerns with the scope or text of the rule.
    3. Requirement that the contract clause include a list of specific
information and/or technology subject to export controls.
    4. Ability of DoD to identify export-controlled information and
technology.
    5. Flow-down of export control clauses to subcontracts.
    6. Termination for convenience.
    7. Reasonable limits on identifying foreign persons.
    The following is a discussion of the comments and the changes
included in this interim rule as a result of those comments:

1. National Policy Concerns

    a. Comment: Many individual citizens were concerned about foreign
access to classified information.
    DoD Response: It is important to understand that this DFARS rule is
intended to reinforce the statutory and regulatory requirements that
must be in place prior to foreign national access to any export-
controlled items, including information or technology, whether
classified or not. Access to classified information or technology is
subject to additional requirements. The second proposed rule and this
interim rule do not permit foreign students or workers access to
classified information. To the contrary, this interim rule reminds
universities and companies of their responsibility to comply with
export control laws and regulations. It also directs contracting
officers to include clauses in solicitations and contracts, as
appropriate, to clearly inform contractors of their responsibilities
when export-controlled items are expected to be or may be involved in
the performance of the contract.
    b. Comment: Thirty-eight respondents voiced concern regarding the
loss of jobs for U.S. citizens to foreign workers and graduate
students.
    DoD Response: The DFARS rule neither encourages nor endorses the
use of foreign workers or students. One purpose of the rule is to
ensure that appropriate contracts include a clause that informs
contractors that export-controlled items are expected to be involved in
the performance of their contracts and to remind them of their separate
responsibility to comply with export control laws and regulations.
    c. Comment: Eleven respondents expressed concern regarding the
security risks of outsourcing jobs or using foreign students for DoD
research.
    DoD Response: This DFARS rule should have the effect of reducing
the risk of unauthorized access to export-controlled information or
technology under DoD contracts. The rule requires DoD to inform
contractors if export-controlled items are expected to be involved in
contract performance, and to remind contractors of their responsibility
to comply with export control laws and regulations.
    d. Comment: Comments received from universities and their
associations stated that the rule conflicts with National Security
Decision Directive (NSDD) 189, because fundamental research is shielded
from export control laws. Twenty-one respondents wanted DoD to ensure
that no restrictions would apply to fundamental research.
    DoD Response: This DFARS rule is consistent with existing laws,
Executive orders, and regulations. NSDD 189 provides an exception to
its own applicability when the directive conflicts with applicable
statutes. NSDD 189 states, ``No restrictions may be placed upon the
conduct or reporting of federally-funded fundamental research that has
not received national security classification, except as provided in
applicable U.S. Statutes.'' Export control laws are applicable
statutes. It should also be noted that fundamental research, as defined
by NSDD 189, does not involve ``proprietary research * * *, industrial
development, design, production, and product utilization, the results
of which ordinarily are restricted for proprietary or national security
reasons.'' Most DoD contracts awarded for conducting fundamental
research do not involve export-controlled information or technology.
However, there are rare instances in which export-controlled
information or technology may be used to conduct fundamental research.
In such cases, the entity must be in compliance with the applicable
export control laws and regulations. Also, there is a borderline where
fundamental research meets more advanced applied research and
development. One purpose of the DFARS rule is to remind universities
that they must notify the contracting officer when they have reason to
believe this line may be crossed.

[[Page 42276]]

    e. Comment: Twenty-six respondents stated that hiring competent
U.S. workers reduces security risk.
    DoD Response: The DFARS rule does not address the impact of
workforce competency on security. Therefore, this comment does not
affect the content of the rule.
    f. Comment: Many respondents commented on issues associated with
foreign workers. These included concerns about the H-1b visa process;
willingness of foreign workers to accept lower wages; increasing
dependence on foreign researchers undermining the future U.S. science
and engineering base; the need for immigration law reform; relaxing
security requirements for foreign students; minority citizen
unemployment; and weak academic credentials of some foreign students.
    DoD Response: These comments are not applicable to this DFARS rule.
The DFARS rule directs contracting officers to inform contractors when
they know, based on input from the requiring activity, that export-
controlled items are expected to be involved in the performance of a
DoD contract, and to remind DoD contractors of their responsibility to
comply with export control laws and regulations.
    g. Comment: Several respondents commented on the administrative
cost or cost-effectiveness of complying with export control laws and
regulations. Twenty of these comments dealt with specific steps
associated with compliance. Seven responses contained reminders that
key technologies and/or national security data must be safeguarded
regardless of the cost.
    DoD Response: These comments are not applicable to this DFARS rule.
While the cost of compliance with export control laws and regulations
may be relatively small or large, this DFARS rule does not add to or
subtract from that cost. All U.S. persons are responsible for complying
with export control laws and regulations (which were not created or
augmented by this rule), and this rule does not exempt anyone from that
responsibility.

2. Concerns With the Scope or Text of the Rule

    a. Comment: Twenty-five respondents from the university community
expressed concern that the second proposed rule was still too broad or
that it went beyond reminding contractors of their separate EAR and
ITAR responsibilities. Seemingly related comments from some of the same
respondents added that DoD should leave the subject to the Department
of State and the Department of Commerce.
    DoD Response: DoD does not believe that the DFARS rule goes beyond
reminding contractors of their responsibilities. The rule requires
contracting officers to include an appropriate clause in solicitations
and contracts if export-controlled items are expected to be involved in
contract performance, as determined by the requiring activity. This is
the method for ``reminding'' contractors, i.e., getting the required
information into solicitations and contracts. The clause language
clearly directs contractors to the ITAR and the EAR, and to the
Department of State and the Department of Commerce for answers to
questions about ITAR and EAR requirements. DoD relies on the
Departments of State and Commerce to administer their export control
programs.
    b. Comment: Twenty-six respondents stated that fundamental research
cannot generate controlled information or technology.
    DoD Response: DoD disagrees with this comment, because there are
situations in which export controls may affect the conduct of
fundamental research:
    (1) Although fundamental research cannot by definition result in
export-controlled information, fundamental research can evolve into
more advanced applied research. At this transition point, the research
may involve export-controlled information or technology. The instances
when this happens midway through a research contract may be rare.
However, almost all applied research is an outgrowth of work that began
as fundamental research. There is a point at which certain research
projects become specific enough to involve export-controlled
information or technology. To maintain national security, DoD and its
contractors must be mindful of their responsibility to identify that
crossover point.
    (2) When export-controlled information or technology is used to
conduct fundamental research.
    (3) When the distribution of the results of fundamental research is
restricted due to proprietary reasons or if the research has received
national security classification (see EAR section 734.8).
    c. Comment: Nineteen respondents requested clarification of the
proposed clause at 252.204-70XX, Requirements for Contracts Involving
Export-Controlled Information or Technology. Some respondents
questioned if all technology must be identified, even if applicable
licensing permitted its use. Other respondents requested guidance for
situations where exclusions for other than fundamental research exist,
such as those for published materials or bona fide employees.
    DoD Response: Export-controlled items, including information and
technology, remain controlled under applicable statutes even if an
exemption applies in a particular situation. Neither the prescriptive
language of the DFARS rule, nor the clauses prescribed for use, are the
appropriate place for guidance or information regarding exemptions.
Note that the DFARS rule does not include the requirement that specific
export-controlled information or technology be identified in the
contract clause. (See the DoD Response to the Comment in section 3 of
this discussion.)
    d. Comment: Several respondents stated that the structure of the
clauses is more complex than necessary. They recommended two clauses
instead of three.
    DoD Response: The interim rule reduces the number of clauses from
three to two.

 3. Requirement That the Contract Clause Include a List of Specific
Information and/or Technology Subject to Export Controls

    Comment: One respondent objected to the requirement in the proposed
clause at 252.204-70XX, for a list of the specific export-controlled
information and/or technology, which the parties are to keep current
during the period of contract performance. The respondent recommended
elimination of this requirement, because it is unnecessary and would
create the possibility of a contractor being in breach of the clause
due to inadvertent errors in the list, even if the contractor has an
adequate export control system.
    DoD Response: DoD considered the requirement and concluded that a
different approach would better achieve the intended purpose while
being less burdensome. A DoD Inspector General report on this subject
(D-2004-061) stressed the importance of identifying export-controlled
information and technology in DoD contracts to ensure the awareness
necessary to prevent unauthorized disclosure. A key message in the DoD
Inspector General report was that there is an inadequate understanding
of export control requirements among some in the contractor community,
and inadequate attention paid to the effect export controls have on the
performance of DoD contracts. Identifying the export-controlled
information and technology involved in the performance of the contract
was intended to ensure that inexperienced contractors understand what
must be controlled, and that

[[Page 42277]]

experienced contractors and their Government counterparts share a
common understanding of the export-controlled information and
technology involved in the contractor's proposed approach to satisfying
contract requirements. Mindful of this underlying intent, and
considering the merits of the public comments, DoD considered an
alternative that would achieve the intended result. That alternative
was to require the clause to identify the category(ies) of export-
controlled information and/or technology (rather than the specific
export-controlled information and/or technology) expected to be
involved in performance of the contract. This alternative proved
unacceptable, however, to the agencies of the Federal Government
responsible for enforcing export control laws and regulations. From
their point of view, it is important that any contract clause be free
of information that could possibly create ambiguity about the
contractor's responsibility to comply with export control laws and
regulations. As a result, the DFARS rule will cause requiring
activities, contracting officers, offerors, and contractors to be aware
that export-controlled items, including information and technology, are
expected to be involved in performance of the contract, but it will not
require identification of the export-controlled items. The contractor's
responsibility to comply with all applicable laws and regulations
regarding export-controlled items exists independent of, and is not
established or limited by, the information provided in the rule or the
prescribed contract clauses.

4. Ability of DoD To Identify Export-Controlled Information and
Technology

     Comment: Several respondents stated that DoD contracting officers
are not qualified to identify controlled information and technology,
nor do they know when exclusions and exemptions from licensing
requirements apply.
    DoD Response: DoD agrees that this is not an area in which DoD
contracting officers are expected to have expertise. The DFARS rule
does not require contracting officers to identify specific export
control classifications or categories for the information or technology
involved. Moreover, the DFARS rule notes that the agencies responsible
for the ITAR and EAR have responsibility for providing authoritative
guidance on such matters. The DFARS rule assigns to the requiring
activity the responsibility for determining whether export-controlled
items are expected to be involved in performance of a contemplated
contract. Requiring activity personnel are responsible for determining
if a research proposal merits funding and whether the Government
receives adequate value for services performed. Training for such
requiring activity personnel (and contracting officers) is presently
available through the Defense Acquisition University. This training is
being supplemented to make it more suitable for personnel responsible
for implementing this DFARS rule and to keep the information current
and share lessons learned.

5. Flow-Down of Export Control Clauses to Subcontracts

    Comment: Several respondents stated that the flow-down of any
export-control related clauses is problematic for universities.
Commercial entities may not be aware of NSDD 189 and fundamental
research. Overuse of the clause when unnecessary could harm the
university-industry-government research partnership.
    DoD Response: The clause in the interim rule at DFARS 252.204-7008,
Requirements for Contracts Involving Export-Controlled Items, requires
flow-down only to subcontracts that are expected to involve access to
or generation of export-controlled items. The clause in the interim
rule at 252.204-7009, Requirements Regarding Potential Access to
Export-Controlled Items, must be used when the parties do not
anticipate that the contractor will generate or need access to export-
controlled items and does not include a flow-down requirement.

6. Termination for Convenience

    Comment: One respondent requested that termination for convenience
be allowed for those projects that begin as fundamental research but
later develop export control issues.
    DoD Response: The clause in the interim rule at 252.204-7009,
Requirements Regarding Potential Access to Export-Controlled Items,
addresses this issue. Paragraph (c) of the clause states that if,
during performance of the contract, the contractor notifies the
contracting officer that the contractor will generate or need access to
export-controlled items, the contracting officer may, as one of three
possible courses of action, terminate the contract in whole or in part
for the convenience of the Government in accordance with the
Termination clause of the contract.

7. Reasonable Limits on Identifying Foreign Persons

    Comment: One respondent commented that DoD should place limits on
identifying foreign persons and should avoid unnecessarily broad
reviews of individuals working on subcontracted research efforts at
universities.
    DoD Response: The comment is not relevant to this DFARS rule. The
rule does not address requirements for identification of foreign
persons.
    This rule was not subject to Office of Management and Budget review
under Executive Order 12866, dated September 30, 1993.

B. Regulatory Flexibility Act

    DoD does not expect this rule to have a significant economic impact
on a substantial number of small entities within the meaning of the
Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because all
contractors, including small entities, are already subject to export-
control laws and regulations. The requirements of this rule reinforce
existing responsibilities. Therefore, DoD has not performed an initial
regulatory flexibility analysis. DoD invites comments from small
businesses and other interested parties. DoD also will consider
comments from small entities concerning the affected DFARS subparts in
accordance with 5 U.S.C. 610. Such comments should be submitted
separately and should cite DFARS Case 2004-D010.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply, because the rule does
not impose any information collection requirements that require the
approval of the Office of Management and Budget under 44 U.S.C. 3501,
et seq.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary
of Defense that urgent and compelling reasons exist to publish an
interim rule prior to affording the public an opportunity to comment.
This interim rule implements Section 890(a) of the National Defense
Authorization Act for Fiscal Year 2008 (Pub. L. 110-181). Section
890(a) requires DoD to prescribe regulations, not later than July 26,
2008, requiring DoD contractors providing goods or technology subject
to export controls under the Arms Export Control Act or the Export
Administration Act of 1979 to comply with those Acts and applicable
regulations, including the International Traffic in Arms Regulations
and the Export Administration Regulations. Comments received in
response to this interim rule will be considered in the formation of
the final rule.

[[Page 42278]]

List of Subjects in 48 CFR Parts 204, 235, and 252

    Government procurement.

Michele P. Peterson,
Editor, Defense Acquisition Regulations System.

0
Therefore, 48 CFR parts 204, 235, and 252 are amended as follows:
0
1. The authority citation for 48 CFR parts 204, 235, and 252 continues
to read as follows:


    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 204--ADMINISTRATIVE MATTERS

0
2. Subpart 204.73 is added to read as follows:
Subpart 204.73--Export-Controlled Items
Sec.
204.7300 Scope of subpart.
204.7301 Definitions.
204.7302 General.
204.7303 Policy.
204.7304 Procedures.
204.7305 Contract clauses.

Subpart 204.73--Export-Controlled Items


204.7300  Scope of subpart.

    This subpart implements Section 890(a) of the National Defense
Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).


204.7301  Definitions.

    As used in this subpart--
    Applied research means the effort that--
    (1) Normally follows basic research, but may not be severable from
the related basic research;
    (2) Attempts to determine and exploit the potential of scientific
discoveries or improvements in technology, materials, processes,
methods, devices, or techniques; and
    (3) Attempts to advance the state of the art.
    Export-controlled items is defined in the clauses at 252.204-7008
and 252.204-7009.
    Fundamental research, as defined by National Security Decision
Directive (NSDD) 189, means basic and applied research in science and
engineering, the results of which ordinarily are published and shared
broadly within the scientific community. This is distinguished from
proprietary research and from industrial development, design,
production, and product utilization, the results of which ordinarily
are restricted for proprietary or national security reasons.


204.7302  General.

    Export control laws and regulations restrict the transfer, by any
means, of certain types of items to unauthorized persons. The
International Traffic in Arms Regulations (ITAR) and the Export
Administration Regulations (EAR) establish these restrictions. See PGI
204.7302 for additional information.


204.7303  Policy.

    (a) It is in the interest of both the Government and the contractor
to have a common understanding of export-controlled items expected to
be involved in contract performance.
    (b) The requiring activity shall review each acquisition to
determine if, during performance of the contemplated contract, the
contractor is expected to generate or require access to export-
controlled items.


204.7304  Procedures.

    (a) Prior to issuance of a solicitation for research and
development, the requiring activity shall notify the contracting
officer in writing when--
    (1) Export-controlled items are expected to be involved; or
    (2) The work is fundamental research only, and export-controlled
items are not expected to be involved.
    (b) Prior to issuance of a solicitation for supplies or services,
the requiring activity shall notify the contracting officer in writing
when--
    (1) Export-controlled items are expected to be involved; or
    (2) The requiring activity is unable to determine that export-
controlled items will not be involved. See PGI 204.7304 for guidance
regarding this notification requirement.


204.7305  Contract clauses.

    (a) Use the clause at 252.204-7008, Requirements for Contracts
Involving Export-Controlled Items, in solicitations and contracts when
the requiring activity provides the notification at 204.7304(a)(1) or
(b)(1), indicating that export-controlled items are expected to be
involved in the performance of the contract.
    (b) Use the clause at 252.204-7009, Requirements Regarding
Potential Access to Export-Controlled Items, in solicitations and
contracts--
    (1) For research and development, except when the clause at
252.204-7008 will be included; or
    (2) For supplies and services, when the requiring activity provides
the notification at 204.7304(b)(2).

PART 235--RESEARCH AND DEVELOPMENT CONTRACTING


235.071  [Redesignated]

0
3. Section 235.071 is redesignated as section 235.072.

0
4. A new section 235.071 is added to read as follows:


235.071  Export-controlled items.

    For requirements regarding access to export-controlled items, see
Subpart 204.73.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
5. Sections 252.204-7008 and 252.204-7009 are added to read as follows:


252.204-7008  Requirements for contracts involving export-controlled
items.

    As prescribed in 204.7305(a), use the following clause:

Requirements for Contracts Involving Export-Controlled Items (Jul 2008)

    (a) Definition. Export-controlled items, as used in this clause,
means items subject to the Export Administration Regulations (EAR)
(15 CFR Parts 730-774) or the International Traffic in Arms
Regulations (22 CFR Parts 120-130). The term includes:
    (1) Defense items, defined in the Arms Export Control Act, 22
U.S.C. 2778(j)(4)(A), as defense articles, defense services, and
related technical data. The term ``defense items'' includes
information and technology.
    (2) Items, defined in the EAR as ``commodities, software, and
technology,'' terms that are also defined in the EAR, 15 CFR 772.1.
Regarding the release of items subject to the EAR to foreign
nationals within the United States, ``items'' only include
technology and software source code (and not commodities) subject to
the EAR.
    (b) The parties anticipate that, in the performance of this
contract, the Contractor will generate or need access to export-
controlled items.
    (c) The Contractor shall comply with all applicable laws and
regulations regarding export-controlled items, including the
requirement for contractors to register with the Department of State
in accordance with the ITAR. The Contractor shall consult with the
Department of State regarding any questions relating to the ITAR and
with the Department of Commerce regarding any questions relating to
the EAR.
    (d) The Contractor's responsibility to comply with all
applicable laws and regulations regarding export-controlled items
exists independent of, and is not established or limited by, the
information provided by this clause.
    (e) Nothing in the terms of this contract is intended to change,
supersede, or waive any of the requirements of applicable Federal
laws, Executive orders, and regulations, including but not limited
to--
    (1) The Export Administration Act of 1979, as amended (50 U.S.C.
App. 2401-2420);

[[Page 42279]]

    (2) The Arms Export Control Act of 1976 (22 U.S.C. 2751 et
seq.);
    (3) The International Emergency Economic Powers Act (50 U.S.C.
1701-1707);
    (4) The Export Administration Regulations (15 CFR Parts 730-
774);
    (5) The International Traffic in Arms Regulations (22 CFR Parts
120-130);
    (6) Executive Order 13222, as extended;
    (7) DoD Directive 2040.2, International Transfers of Technology,
Goods, Services, and Munitions; and
    (8) DoD Industrial Security Regulation (DoD 5220.22-R).
    (f) The Contractor shall include the substance of this clause,
including this paragraph (f), in all subcontracts that are expected
to involve access to or generation of export-controlled items.

(End of clause)


252.204-7009  Requirements regarding potential access to export-
controlled items.

    As prescribed in 204.7305(b), use the following clause:

Requirements Regarding Potential Access to Export-Controlled Items (Jul
2008)

    (a) Definition. Export-controlled items, as used in this clause,
means items subject to the Export Administration Regulations (EAR)
(15 CFR Parts 730-774) or the International Traffic in Arms
Regulations (22 CFR Parts 120-130). The term includes:
    (1) Defense items, defined in the Arms Export Control Act, 22
U.S.C. 2778(j)(4)(A), as defense articles, defense services, and
related technical data. The term ``defense items'' includes
information and technology.
    (2) Items, defined in the EAR as ``commodities, software, and
technology,'' terms that are also defined in the EAR, 15 CFR 772.1.
Regarding the release of items subject to the EAR to foreign
nationals within the United States, ``items'' only include
technology and software source code (and not commodities) subject to
the EAR.
    (b) The parties do not anticipate that, in the performance of
this contract, the Contractor will generate or need access to
export-controlled items.
    (c) If, during the performance of this contract, the Contractor
becomes aware that the Contractor will generate or need access to
export-controlled items--
    (1) The Contractor shall notify the Contracting Officer in
writing; and
    (2) The Contracting Officer will expeditiously--
    (i) Modify the contract to include the Defense Federal
Acquisition Regulation Supplement clause 252.204-7008, Requirements
for Contracts Involving Export-Controlled Items;
    (ii) Negotiate a contract modification that eliminates the
requirement for performance of work that would involve export-
controlled items; or
    (iii) Terminate the contract, in whole or in part, as may be
appropriate, for the convenience of the Government, in accordance
with the Termination clause of the contract.

(End of clause)


252.235-7002,  252.235-7003, 252.235-7010, and 252.235-7011 [Amended]

0
6. Sections 252.235-7002, 252.235-7003, 252.235-7010, and 252.235-7011
are amended in the introductory text by removing ``235.071'' and adding
in its place ``235.072''.

[FR Doc. E8-16673 Filed 7-18-08; 8:45 am]

BILLING CODE 5001-08-P