On March 22, 2023, the Department of Defense (DoD) issued a proposed rule that would amend the Defense Federal Acquisition Regulation Supplement (DFARS) to require certain contractors to provide export authorizations to the Defense Authorization Management Agency (DCMA).
DCMA performs quality assurance reviews for manufacturing operations to ensure contractors have the appropriate systems in place to meet quality and functionality standards along with contractual requirements regarding testing and validation. In some cases, DCMA will engage a foreign auditor to perform the quality assurance review. However, to do so DCMA needs insight into applicable export authorizations to see if engaging the foreign auditor is permissible.
The proposed rule would require contractors to provide export authorizations to DCMA when the contract requires (i) government quality assurance surveillance oversight and (ii) performance in or delivery to a government quality assurance country (Australia, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Israel, Italy, Republic of Korea, Netherlands, Norway, Poland, Romania, Slovakia, Spain, Sweden, Turkey, and the United Kingdom). Export authorizations include export licenses, exemptions, exceptions, and other approvals. The contractor must also provide the contact information for an empowered official or export point of contact.
Currently, DCMA uses Federal Acquisition Regulation (FAR) 4.703(a) to obtain access to customer export authorizations. Notably, the current provision only requires contractors to make export authorizations available to DCMA. As a result, DCMA has to travel to the contractor’s location to review the export authorizations. The proposed change would eliminate the need for travel because contractors would be required to provide the export authorization itself to DCMA. This change would make it easier for DCMA to determine if a foreign auditor can perform the required quality assurance review.
The proposed rule makes this change by updating DFARS 252.225-7048, Export Controlled Items to include this requirement. Comments on the proposed rule are due on May 22, 2023.
Link to Key Takeaways Key Takeaways
- Contractors should be aware of this potential change that would require them to provide DCMA with relevant export authorizations.