Standard Licensing

ITAR Part §130 Requirements
Sublicensing

  Like brokering, sublicensing can be confusing to folks that do not encounter it everyday. Sublicensing is when a prime contractor chooses to solicit a third party to assist in completing a program or project. Most often this is done in a manufacturing environment, although occasionally in the performance of a defense service.

Using manufacturing as an example: The Prime Contractor, Missiles are Us, has won an award with the U.S. Government to build the latest in stealth missiles — the Siamese cat. Missiles are Us can manufacturer all the components with the exception of the nose cone. They will need to contract with Nose Cones are Us of Canada to have that part machined. Nose Cones are Us subcontracts the machining of screws to hold the nose cone in place to Screwballs Unlimited, another Canadian company.

Missiles are Us will be required to obtain a TAA with Nose Cones are Us to exchange information relating to the development of the Siamese Cat nose cone. Missiles are Us will request authorization in their TAA to sublicense to Screwballs Unlimited, as they may have to provide technical data in the form of sizing, materials and placement of the manufactured screws.

Now suppose that Missiles are Us is working with Nose Cones are Us and Nose Cones are Us has decided to sublicensing the purchasing of the screws to Screwballs Unlimited. If no technical data is passed from either Missiles are Us or Nose Cones are Us (for instance the screws were a standard off the shelf product that Screwballs Unlimited makes anyway) then the State Department does not consider that act Sublicensing.

The key to understanding the concept is the re-transfer to a third party of any Defense Article, technical data, or defense services that were approved for export to the original prime foreign party contractor.

Many of you will be familiar with the concept of Third Country Nationals (TCNs) — Sublicensing is not the same principle. Because the path to sublicensing can be convoluted and difficult to manage, involve your compliance professional as soon as possible. Much like the nationalities of TCNs must be identified in your projects prior to approval, there are special requirements for sublicensing, and in some cases additional documentation must be obtained, up to and including each of the individuals working on the sublicensing project signing Non-Disclosure Agreements. And like brokering, these regulations are frequently updated and changed as to what requirements must be fulfilled and which countries have those requirements. It is best to leave this determination to your compliance professional.