Department Seal Defense Trade Security Initiative:
ITAR Exemption for FMS Defense Services

Fact Sheet Released by the Bureau of Political-Military Affairs,
U.S. Department of State and the Office of the Undersecretary of Defense for Acquisition, Technology, and Logistics, U.S. Department of Defense
Washington, D.C., May 24, 2000
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Goal: To facilitate the export of defense services that were sold pursuant to the USG Foreign Military Sales (FMS) program.

Discussion: The ITAR (Section 126.6) provides an exemption for exports made pursuant to FMS cases (Letters of Offer and Acceptance or LOAs). In 1997, however, State, upon learning that some exporters had been misusing the exemption by exporting defense services after there was no FMS LOA in effect, decided to require an export license for same.

This approach required companies having to send Technical Assistance Agreements (TAAs) describing the defense services to foreign governments for signature. The contractors would then submit the signed TAAs to State for the required export licenses in order to perform the defense services for which the companies were under U.S. Government contract pursuant to the LOA with the foreign government.

Solution: State and DoD have developed clarifying language (to be promulgated) for ITAR 126.6 that will make clear when the FMS exemption is available for exports of defense services. The exemption will apply to both prime contractors and their subcontractors.

Accordingly, a license from the Office of Defense Trade Controls (ODTC) will not be required if the defense service to be transferred was sold pursuant to the FMS LOA provided the transfers take place only during the period which the FMS LOA and implementing USG FMS contracts and subcontracts are in effect and services to be transferred are specifically identified in the LOA.

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Bureau of Political-Military Affairs
Department of State