Procurement From The USA

This page is an extract from the full topic guidance on Procurement From the United States of America (USA) [197KB PDF]. It details any Constraints associated with procurement from the USA, provides a summary of the Authoritative Guidance and lists any essential reading, further reading or associated documents.

If you have any queries on this topic, please contact the Sponsor by email: DGDC CS-2D-Asst-Hd.

Constraints

The EC Public Procurement Regulations apply to overseas procurement contracts unless the nature of the work qualifies for an exemption. Reference must be made to the detailed guidance on the mandatory procedures to be followed.

The export of items on the US Munitions List are subject to the Arms Export Control Acts, as implemented by the US Government's International Traffic in Arms Regulations. Other defence-related exports from the US such as dual-use items are governed by other US laws, e.g. the US Export Administration Act. All such exports require an export licence. United Kingdom Defence Procurement Office can help facilitate the timely processing of licenses, in particular for Urgent Operational Requirements.

MOD is liable for the payment of import duty on defence equipment from the US, except where a waiver applies in accordance with the EC Council Regulation 150/2003.

Authoritative Guidance Summary

This Topic details special factors affecting acquisition from the US and should be read in conjunction with the Overseas Procurement topic.

The US/UK Reciprocal Defence Procurement (RDP) MOU sets out a number of principles which should be followed when considering procurement from the US; the overriding principle is the stated intention that the Governments will "provide firms of the other country with treatment no less favourable than that accorded to domestic enterprises".

Procedures for priority supply have been agreed under the provisions of an Annex to the US/UK RDP MOU for contracts placed in the US by MOD or UK Industry to streamline requests and authorisation of support under the US Defense Priorities and Allocations Scheme (US DPAS).

Quality Assurance services may be obtained free of charge from the USG under the provisions of an Annex to the US/UK RDP MOU.

MOD has a procurement organisation in Washington DC known as the UK Defence Procurement Office (UKDPO) whose function is to assist UK acquisition teams in all aspects of procurement from the US, either through Direct Commercial Sales (DCS) or through Government-to-Government Foreign Military Sales (FMS).

Generally, the terms and conditions appropriate to a purchase from a UK contractor should be applied in contracts placed with US contractors. Additional considerations apply to certain standard and bespoke conditions and specialist advice is available on Intellectual Property Rights from UKDPO.

The US export licensing process is complex. Acquisition teams should identify at the earliest possible opportunity any US-origin items (goods, services, or technology) that are to be procured at the prime or subcontract level, because these will almost invariably require US Government approval, usually export licences. They should factor into their procurement plans the additional time and effort it will take to obtain those approvals.

The export of technical information related to an item on the US Munitions List is particularly complex, as is the provision of defence services (including technical assistance). A pre-requisite to the provision of either will be the approval by the US Government of a Technical Assistance Agreement (TAA) between the exporter and importer or, exceptionally, a Manufacturing Licence Agreement (MLA) where the export of manufacturing data is involved. UKDPO can help facilitate and have negotiated special arrangements for UORs.

Where releasability of US defence goods or services may be in doubt an Advisory Opinion may be obtained from US State Department's Directorate of Defence Trade Controls (DDTC).

End use assurances may be required by the US State Department's Directorate of Defence Trade Controls in connection with the export of defence goods, defence services or related technical data subject to the controls of 22 Code of Federal Regulations (CFR) 120-130.

Technical information to be provided by US contractors will be subject to the US's International Traffic in Arms Regulations (ITAR) and a pre-requisite to its release will be the approval of a Technical Assistance Agreement and Manufacturing Licence Agreements. UKDPO can help facilitate and have negotiated special arrangements for UORs.

The export of goods from FMS or DCS contracts may be effected through the Defence Supply Chain Operations & Movements (DSCOM)'s contracted freight forwarder DHL to ship items back to UK. Special arrangements are available to airfreight UOR goods.

For Urgent Operational Requirements (UORs), acquisition teams should seek to involve UKDPO at the earliest opportunity. UKDPO have made additional arrangements under US DPAS for UORs. The lead point of contact is the Attach Defence Equipment (Commercial) who is the Head of UKDPO.

For non-competitive procurements, reciprocal pricing arrangements exist with the US Government, which should be provided for contractually in appropriate cases.

'The Gast/Harding Arrangement' between MOD and the US Department of Defense (US DOD) provides that certain levies, profit sharing arrangements for levy and recoupment costs can be waived at the request of the purchasing nation.

Associated Documents

Annex A - Points To Consider For FMS Procurements [27KB PDF]

Annex B - Form DSP 83 Non-Transfer And User Certificate [51KB DOC]

Annex C - Form DSP 83 Disclosure Note [27KB DOC]

Annex D - ITAR Sections 124.1 To 124.15 [83KB PDF]

Annex D1 - Sample TAA [40KB PDF]

Annex D1 - Appendix 1 - Non Disclosure Agreement [29KB DOC]

Annex D1 - Appendix 2 - DDTC Frequently Asked Questions (FAQs) [33KB PDF]

Annex E - Gast/Harding Request By USDOD For Waiver [26KB PDF]

Annex F - Gast/Harding Request By UK For Waiver [24KB PDF]

Essential Reading

Overseas Procurement Topic.

UKDPO internet website External link to Internet content

UKDPO intranet website External link to Ministry of Defence Intranet content

Change History

1 February 2010: Paragraph 31 amended to reflect the change to DEFCON 632.
1 May 2009: Change to Sponsor title
1 February 2009: In July 2008, the US State Department (DDTC) issued a significantly revised and expanded set of guidelines on Technical Assistance Agreement and Manufacturing Licence Agreements. These are both forms of US export licence governed by the US ITAR). The Topic summarises these changes and explains their effect on MOD business. The most important change of substance has been the introduction of mandatory clauses for all new, amended and extended TAA/MLA, that deal specifically with third country and dual nationality employees of foreign (non-US) licensees to these agreements, including those of MOD when it is required to enter into these agreements in order to benefit from a US export.; A complete template TAA is provided at Annex D1. It is suitable for use by MOD and complies with these guidelines. Following intervention by BDSUS on MODs behalf, various clarifications has now been issued by DDTC on its website about the effect of these mandatory clauses (see Appendix 2 to Annex D1). One effect of these clarifications is that these clauses will not prevent MODs disclosure of ITAR-controlled information to its civilian or military personnel when deployed on training or operations.
1 August 2008: Change to Sponsor title.
1 March 2008: The topic has been enhanced to provide acquisition teams with more comprehensive advice on US export control issues (see Paragraphs 50 to 71), retransfers (see Paragraph 86 to 93) and disputes under US FMS (see Paragraphs 45 to 46).
1 December 2007: Minor editorial changes to reflect name change from British Defence Staff Washington (BDS(W)) to British Defence Staff United States (BDS-US) and updated web address.
1 May 2007: Change to Sponsor title from CSG-FOI.
1 April 2007: Revised guidance highlighting the requirement for Contractors to notify the Authority of restrictions on disclosure /use of Intellectual Property and the practical significance of foreign export control law - see new paragraph 60.