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Defense Service Provider Registration and Licensing Requirements Clarified in DDTC Rule

Tuesday, May 26, 2015
Sandler, Travis & Rosenberg Trade Report

The State Department’s Directorate of Defense Trade Controls is proposing to amend the International Traffic in Arms Regulations to clarify the registration and licensing requirements for U.S. persons located in the U.S. or abroad who are engaged in the business of furnishing defense services to their foreign employers. Similarly, DDTC seeks to clarify when these persons may be covered under existing DDTC authorizations previously issued to their employers and affiliates and when they are instead obligated to apply for their own license or agreement prior to engaging in the provision of defense services. DDTC is seeking comments on this proposed rule, particularly from foreign persons who currently employ or are contemplating engaging U.S. persons as regular employees or independent contractors, as well as from current or future employees and contractors themselves, no later than July 27.

According to DDTC, the proposed changes would affect U.S. persons employed as regular employees of a U.S. company but working at a foreign branch of that company, U.S. persons employed as regular employees of a U.S. company’s foreign subsidiary or affiliate where the U.S. company is actively participating in the provision of services to the foreign subsidiary or affiliate, U.S. persons employed as regular employees of a U.S. company’s foreign subsidiary or affiliate where the U.S. company is not actively participating in the provision of services to the foreign subsidiary or affiliate, U.S. persons employed outside the U.S. as independent contractors who do not meet the definition of a regular employee, and U.S. persons employed as regular employees of a foreign company with no U.S. affiliation.

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