01/09/08

PERUJuly 2009

01/09/08

End-Use Monitoring Third Party Transfer

of U.S.-Origin Defense Equipment

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Objectives

Review the programs under which the equipment was supplied.

Know the goals, requirements and responsibilities for End Use Monitoring.

Know the requirements for Third party Transfer of U.S. Origin Defense Equipment.

Introduce the SCIP EUM information

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GraveGraveNew Requests

ZASTAVIA

Disposal

Sale

End use change

BANDARIABANDARIA

CradleCradle

ThirdPartyTransfer

ThirdPartyTransfer

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Arms Export Control Act AECAForeign Assistance Act FAANational Defense Authorization Act 2008Export Administration Act

Laws

International Traffic in Arms Regulations (ITAR)/Munitions list Security Assistance Management Manual DoD M Demilitarization Manual DoD M Arms, Ammunition and Explosives (AA&E) Export Administration Regulation

Regulations and Policies

Laws and Regulations

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Basic U.S. Arms Transfer Programs

Military Assistance Program (1950-81)* Military Assistance Program (MAP merger)

(1981-90)* FAA, Sec. 506 drawdown authority* FAA grant EDA programs* Foreign Military Sales (FMFP grant and loan)* Foreign Military Sales (cash)** Direct Commercial Sales (USML & CCL)***

*FAA 505 **LOA ***DSP 83

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Conditions of Eligibility – Grants(EDA, MAP, Drawdowns, MAP

Merger, FMFP Grant)

No defense articles, services, or related training shall be furnished on a grant basis unless the country agrees to the following “use” provisions: Limits use to government officers, employees, and

agents Does not permit unauthorized transfers Does not permit use for purposes other than those for

which furnished Maintains required security Furnishes observation and information

“Reversionary rights”, or returns equipment to the U.S. when no longer needed

[§505, FAA]

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Non-Transfer, Security, Use Provisions-FMS

FMS (Including FMFP, MAP Merger) or DCS Furnishing of defense articles / services must

strengthen U.S. security & promote world peace. No retransfers without Presidential consent No use of articles / services for purposes other than for

which furnished Recipient to maintain security of such article

Requirements identified in LOA or Non-transfer & Use Certificate (DSP-83**)

Credit (repayable) items: proceeds to USG until loan paid off** Does not include provisions for security

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EUM Goal

Preserve the technological advantages enjoyed by U.S. military forces over potential adversaries by impeding access to militarily significant items and technologies

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GOLDEN SENTRYLegal Basis For Program

Section 40A of the Arms Export Control Act (AECA) enacted in 1996 (Public Law 104-164) The President shall establish a program that provides

for End-Use Monitoring in order to improve accountability with respect to Defense articles sold, leased, or exported under the AECA or FAA.

Requires, to the extent practicable, monitoring of U.S. arms transfers by providing “reasonable assurance” that recipients comply with USG export control requirements regarding the use, transfer, and security of defense articles and services.

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EUM Controls

System of check and cross checks Items ordered are authorized Protection of articles or information Release is properly cleared with USG Delivery to designated government

representative (DGR) Required inventories by PN and US

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USG End-Use Monitoring Programs

State DepartmentBlue Lantern

Defense DepartmentGolden Sentry

Commerce DepartmentExtrancheck

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Verification

VerificationC

ompl

ianc

e

Com

plia

nce

AccountabilityAccountability

DoD EUM Program

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Golden Sentry Program

Designed to provide assurance that: Recipient is complying with USG end-

use, third country transfer, and security requirements, and

Provide for end-use verification of sensitive technologies vulnerable to diversion or misuse.

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EUMLevels of Monitoring

Routine EUM : Conducted on defense articles/services

transferred to a trusted partner LOAs require no unique notes or conditions Performed by SCO and host country

Enhanced EUM (EEUM): Sensitive defense articles and/or services LOAs may contain notes and/or special conditions Contingent on Trust with Verification May require compliance visit by DSCA team Additional funding provided

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“Enhanced EUM” Defense Articles

1. Communication Security (COMSEC) Equipment 2. STINGER Missiles and Gripstocks3. Night Vision Devices4. JAVELIN Missiles and Command Launch Units5. TOW-2B Missiles6. AMRAAM (AIM-120) 7. AIM-9X Advanced Sidewinder Missiles8. SLAM-ER9. Harpoon Block II

(JASSM) (JSOW under consideration)

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Enhanced EUM Defense Articles (Con’t)

10.Joint Munitions, e.g., Joint Air-to-Surface Standoff Missile

11.Unmanned Aircraft System (UAS)12.Standard Missile-3 (SM-3)13.Tomahawk Missile14.Large Aircraft Infrared Countermeasures

(LAIRCM)15.Special Provisions pertaining to Physical

Security and Accountability with the transfer documents

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Enhanced EUM Defense Articles (Con’t)

Section 505 of the FAA: Grant Assistance Equipment provided through EDA, Military Assistance Program (MAP), FMF, etc. Country to provide inventory Country to certify what happened to

items provided that are no longer found.

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Verification Statement

Effective 29 Nov 99, any agreement for the USG sale (FMS) or lease of USML items will include a statement that the USG retains the right to verify credible reports that such items have been used for purposes other than agreed upon.

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Mandatory LOA Note

“Pursuant to the FAA, Section 505,and the AECA, Section 40A, the USG will be permitted, at its discretion to conduct an inspection and physical inventory of all articles and services transferred under this LOA. Upon request, the inventory and accountability records maintained by the purchaser will be made available to the U.S. personnel conducted this inspection.” “If an Enhanced EUM item is included in the FMS case, add the following sentence to the end of the note text above:”

“Enhanced EUM physical security and accountability requirements are annotated in note (insert LOA note number).”

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DSCA Responsibilities

Manage DoD EUM program Policy and guidance Coordinate all EUM notes and

provisos on LOAs Forward reports of possible

violations to DoS Publish reports of lessons learned Manage DSCA visit program

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EUM Visits Familiarization Visit and Regional Forum

Foreign country representatives, SCO, Unified Command and DSCA work together to mutually develop effective EUM compliance plans.

Prompted by a request or the introduction of new equipment Determine requirement(s) for future Compliance Assessment Visit

Compliance Assessment Visit Review and Assess SCO and host nation’s EUM compliance programs This visit is always coordinated with the recipient country/

international organization. Facility visits, inventories

EUM Investigation Visit Investigate possible violations of AECA Section 3 or FAA Section 505 Prompted by information reports or other sources Closely coordinated with the foreign government via the U.S. Embassy

in country and/or State and Defense Departments Directed by DoS

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MILDEP & IA Responsibilities

Identify sensitive technologies and defense articles to be candidates for EEUM

Include non-standard notes for articles and services that require physical security and accountability procedures **

Provide delivery records w/serial #s of all EEUM items to SCO and PN Input item serial # into SCIP

Report possible violations to DSCA Provide DSCA with quarterly report (Chap 8 SAMM) Incorporate EUM into workforce training programs

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Geographic Combatant Commands (GCC) Responsibilities

Maintain a Golden Sentry POC Assess effectiveness of EUM

compliance Ensure all EUM activities are

reported.

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SCO Responsibilities

Designate a Golden Sentry POC Conduct routine EUM and EEUM

visits/inventories as required Establish reporting procedures w/ PN for EEUM

articles and information Report to DSCA when required inventories are

completed (via SCIP) Provide DSCA projected dates of future

compliance visits Support Golden Sentry team visits and

coordinate w/ PN

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SCO Conduct of EUM

Develop a combined EUM Compliance plan with PN

Review all LOAs with SAMM Table C5.T5 notes for EEUM requirements.

Keep records of visits/inventories and PN provided inventories

Keep records of the authorization of Third Party Transfers.

Keep records of reports of expended and consumed items provided by PN

Special budget requests for EEUM

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Partner Nation EUM Responsibilities

Demonstrate support for U.S: principles, laws, regulations, policies and practices

By compliance with the requirements embodied in signed agreements for: Security, Third party transfer, End-use

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Partner Nation EUM Responsibilities (Con’t)

Maintain good interface Develop EUM plan with SCO Maintain good internal accountability Keep records of

Inventories Items

Consumed Expended Damaged or destroyed Transferred Change of end Use

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Blue Lantern EUM Program

Department of State Program that focuses on monitoring Direct Commercial Sales (DCS) of defense articles by U.S. Industry to a foreign nation.

Initiated by DoS in 1990 for DCS Systematic process aimed at enforcing the AECA and the

ITAR DoS approves the export license and primarily focuses on

“pre-delivery” controls (licensing checks) and limited post delivery checks.

Country POCs are located in the Embassy and work for the Ambassador/Department of State.

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Reasons for Unfavorable Checks

One or more parties deemed unreliable recipient of USML based on Blue Lantern check, or other derogatory information about parties uncovered: 37%

End-user reported that that they did not order the items of the license – indicating possible intent on the part of the exporter or other parties to violate the ITAR and AECA: 19%

End-use different than that stated on the license: 18% Parties not listed on the license involved in the transaction:

11% One or more parties violated terms of an agreement or

proviso on the license: 5% Unable to contact/locate a party to license: 4% Evidence of diversion or unauthorized re-export: 3% Refusal to cooperate: 2%

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EXTRANCHECK

EXTRANCHECK EUM Program

Department of Commerce Program that focuses on monitoring Dual-Use Items transfers by U.S. Industry to a foreign nation via the Export Administration Regulation (EAR).

DoC approves the export license and primarily focuses on “pre-delivery” controls (licensing checks) and conducts post delivery checks.

Post delivery checks are performed by Bureau of Industry and Security (BIS) Attaches, “Sentinel Teams” from DoC BIS and U.S. Foreign and Commercial Service Officers.

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What Are Third Party Transfers?

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THIRD-PARTY TRANSFERS

The transfer, sale, disposal or change in end-use of any U.S.-Origin Defense Article, including all associated components, services, and training, acquired through any USG Security Assistance Program.

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All U.S.- Origin Defense Articles, Services, Training, or Data Require USG

Authorization Before Transfer or Sale

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USG Authorization is also required for Demonstrations, Exhibits, and Displays

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Justifications

Internal Security Legitimate Self-Defense To Prevent the Proliferation of Weapons of

Mass Destruction Participation in Collective Arrangements

Consistent with the UN Charter Economic and Social Development

Activities

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The USG will only consider a third-party transfer if the

USG itself would transfer the Defense Articles, Services, Training, or Data to the proposed recipient

Critical To USG Decision

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30-Day Formal Notification Period

MDE

$14 Million Threshold

All Other Articles $50 Million Threshold

30-Day Formal Notification Period

MDE

$14 Million Threshold

All Other Articles $50 Million Threshold

Congressional Notification

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PM/RSAT

Submitting Requests

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Requirements for Consideration

An Official Request from the Divesting Government

A Completed Standard Questionnaire

End-Use, Retransfer, and Security Assurances from the Recipient

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Official Request

Requests are only considered official when signed and forwarded by a Bona Fide Representative of the Divesting Government

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Official Requests

Recipient Entities

CANNOT

submit

Requests

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Using a Broker?

DivestingGovernment Recipient

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Office of Defense Trade Controls Compliance (PM/DTCC)

Directorate of Defense

Trade Controls

U.S. Department of State

www.pmdtc.org

Registration is

for ALL BROKERS

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Standard Questionnaire

Consists of fifteen (15) questions Required questions must be

answered Provide as much detail as possible

about transfer

http://www.state.gov/t/pm/rsat/c14031.htm

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Standard QuestionnaireImportant Questions

Type of Transfer Description and Quantity Method of Acquisition Original Acquisition Value and Year Contact Info for All Participating

Parties

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Government-to-GovernmentPrivate Entity

Temporary TransferChange in End-Use

Disposal

Types of Third Party Transfers

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Private Entities

Presumption of denial

Limited exceptions for entities with proof of government contract or static display

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Temporary Transfer

Coalition Operations Refurbishment/Repair Integration Upgrades Loans

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The use of any U.S.-Origin Defense Article, Service or Training for purposes other than for which it was acquired

Change In End-Use

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Change In End-use

Training Static Display Demonstrations Exhibits Cannibalization (Grant items only)

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The destructionor scrapping

of any U.S.-Origin Defense Article

Disposal

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Disposal

All components require demilitarization in accordance with USG standards before destruction

All participating parties must be listed on request

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De-militarization Manual(DoD 4160.21-M-1)

Graphic and written de-mil procedures for types of end items

Different procedures based on intended end use

Deviation from procedures should be approved by USG

Detailed information from proponent military department.

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Description and Quantity

If known, provide NSN of each article

Provide total of each type of article separately

Provide as much detail as possible on condition of article

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Method of Acquisition

Foreign Military Sale (FMS) Foreign Military Financing Program

(FMFP) Military Assistance Program (MAP) Drawdown Cooperative Development Program Direct Commercial Sales (DCS)

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Net Proceeds

The return of all net proceeds from the sale, including scrap, of any U.S-origin component acquired through a MAP or grant EDA.

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Net Proceeds (Con’t)

WAIVER A waiver may be granted by the

Under Secretary, if the justification warrants, for articles acquired through the Military Assistance Program before 1985

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Assurances

All recipients, including Private Entities, must Provide assurances

Assurances must be signed by a Representative authorized to legally bind

the Recipient Government Assurances must also be provided by the Government exercising legal jurisdiction

over a foreign Private Entity Recipient Average receipt time for assurances is 6

months

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The transfer, sale, disposal or change in end-use of any

U.S.-origin component

without USG authorization

is a

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Providing access to any U.S.-origin component for

Governments or Entities

for intangible transfers

without approval

is also a

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Congressional Requirement

U.S. law requires the

Department of State

to report possible

Third-Party Transfer

violations to Congress

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Violation Penalties

The President and Congress have legal authority to impose penalties

Law does not require imposition of specific penalty

Penalties may range from suspension to termination of FMS programs

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Send Your Request To:

PM/DDTC, SA-1, 12th FloorDirectorate of Defense Trade Controls

Bureau of Political Military AffairsU.S. Department of State

Washington, D.C. 20522-0112(202) 663-1282

www.pmdtc.org

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The SCOToolbox

Security CooperationInformation Portal

(SCIP)

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SCO Toolbox Community Supports the DSCA EUM Program Office, Combatant

Commands and SCO/ODC Offices worldwide

To reach the SCO Toolbox Community, Click here

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EUM Home Page

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EUM Support

01/09/08

End-Use Monitoring Third Party Transfer

of U.S.-Origin Defense Equipment