It is United States' (US) Department of State policy that voluntary disclosures associated with Foreign Military Sales (FMS) acquired equipment and technical data in Australia should be submitted through the Commonwealth Department of Defence, rather than through direct correspondence between industry and the Office of Regional Security and Arms Transfer (RSAT) within the US Department of State. This policy reflects the underlying principle of Section 3 of the US Arms Export Control Act (AECA), which imposes the responsibility for obtaining the necessary approvals for transfers of, and access to, FMS acquired technology by third parties, on a country's government. Conversely, licences and voluntary disclosures associated with Direct Commercial Sales activities under the US International Traffic In Arms Regulations (ITAR) are administered by the Directorate of Defense Trade Controls (DDTC) in the US Department of State.
While industry may correspond directly with the DDTC on voluntary disclosures in accordance with 127.12 of the ITAR, if the disclosure involves Commonwealth owned materiel, it is strongly recommended that the industry participant consult with the Commonwealth before making any disclosure to ensure the materiel isn't already covered by an approval held by the Commonwealth. This document outlines the process to be used by Third Parties (i.e., non Commonwealth staff and entities) that access FMS acquired equipment and technical information where a breach of an existing approval has been identified, or where it is believed that access has been inadvertently granted by the Commonwealth without an appropriate RSAT approval in place.
Third Parties should incorporate this guidance into their internal export control and compliance procedures.
Where a breach related to FMS acquired equipment and/or technical data has occurred, the Third Party's export violation investigation procedure should be followed. However, this investigation procedure should use the Commonwealth as the interface with the US Government. Where investigations include both unauthorised disclosures of ITAR controlled technology and FMS acquired technology (i.e., with both DDTC and RSAT disclosure obligations), the Third Party should discuss the voluntary disclosure with the Commonwealth prior to any disclosure being made to the DDTC.
A process trigger should occur when a recipient of equipment or technical data acquired via FMS identifies that a breach of an existing Third Party Retransfer approval has occurred, or access has occurred without an appropriate RSAT approval being in place. The Third Party should undertake an initial investigation and provide the Defence sponsor of the capability (normally the Capability Acquisition and Sustainment Group's Systems Program Office) with written notification that a potential breach has occurred. This notification should be given within five (5) working days of the date on which the Third Party first identified the breach, and the Commonwealth's preference is for the notice to be provided electronically via email to reduce the possibility of delays.
The notification advice should, as a minimum, contain the following:
- a summary of the issue, including what, if any, Third Party Retransfer approvals exist;
- details of the controlled materiel, including its location, part numbers, and/or descriptors of technical data, and reasons why it is believed the materiel was acquired via FMS;
- details of the Third Party leads for the matter, including their contact details;
- details of any Commonwealth representatives who are believed to be aware of the breach;
- details of actions that have been taken by the Third Party in response to the perceived breach (e.g., quarantining of the relevant equipment or technical data); and
- details of the Third Party point of contact for directing further enquiries to (in the event this is different to the Third Party leads for the matter).
In the initial notification, it is critical that the Third Party provide the Defence sponsor of the capability with details of any mitigating steps or corrective actions that the Third Party has implemented. If the Commonwealth has any comments or concerns, it may then make enquiries to the Third Party to clarify aspects of the information contained within the notification.
Notifications from Third Parties need to be made on the understanding that the information contained within them may be released by the Commonwealth to RSAT or other US Government entities. Importantly, section 3(c)(2) of the AECA requires the President of the United States to report promptly to the United StatesCongress, upon receipt of information, that a substantial violation as described in Section 3(c)(1) of the AECA may have occurred. It is understood that inadvertent access by a Third Party, and minor transactional violations which occur inside Australia, would generally not be classified as substantial violations, and so would be dealt with by the Department of State itself, without input from either the President or Congress.
The Commonwealth will acknowledge receipt of notifications from Third Parties and any associated materials in writing within 10 working days. It will then investigate the matter, make disclosures to RSAT as appropriate, and lead the process for ensuring that necessary authorisations are in place for Third Party access to the FMS acquired technology which was the subject of the notification. This
may require Third Parties to complete and sign assurance letters in support of a Commonwealth retransfer submission to authorise a Third Party's access.
In addition, the Commonwealth will provide visibility of instructions and corrective actions specified by RSAT or by the Commonwealth to the Third Party. The Commonwealth will also confirm the outcome of the disclosure and any related requirements on Third Parties in writing. Any claims for excusable delay or postponement by the Third Party will be addressed in accordance with the applicable contract.
The Commonwealth point of contact for engagement with RSAT on voluntary disclosure issues is the Directorate of Materiel Export Control in the Capability Acquisition and Sustainment Group.