On October 31, 2016, the DoD proposed a rule (81 Fed. Reg. 75,352) that establishes policies and prescribes procedures for the disclosure and withholding of certain unclassified “technical data” and “technology” subject to the ITAR and EAR, respectively. The rule was proposed with the goal of preserving US military superiority by preventing the transfer of technical data that could positively contribute to the military potential of a foreign entity, which in turn could be detrimental to US security interests. Pursuant to current US export control laws, contractors must make sure that unclassified technical data and technology that discloses information with a military or space application is not exported in the absence of authorization from the US government. This proposed rule does not make any changes to the laws or regulations governing the export of technical data and technology. Rather, this proposed rule prescribes the process that contractors must undergo in order to receive “critical technology,” which encompasses technical data and controlled technology, from the DoD.

In order to become a “qualified contractor” under this proposed rule, a contractor would be required to submit a completed DD Form 2345 “Military Critical Technical Data Agreement” (MCTDA) to the United States-Canada Joint Certification Office. In this form, a contractor must make several certifications, including: (1) that he or she is a US citizen; (2) that such technical data and technology is essential to bid or perform on a contract with the DoD or other United States Government (USG) agency, or for other legitimate business purposes; and (3) compliance with US export control laws. This proposed rule states that DoD will only provide critical technology to qualified US contractors, as described above. Critical technology subject to this proposed rule must be marked in accordance with DoD instructions. In addition, when such critical technological information is disseminated, it must be marked in accordance with Vol. 4 of DoD Manual 5200.01.

Under this proposed rule, the controlling DoD office will authorize release of critical technology to qualified contractors unless the qualification of the contractor in question has been temporarily revoked. This proposed rule would allow DoD to implement a temporary revocation when there is “substantial and credible information” that a qualified contractor has violated a US export control law, violated its DD Form 2345 certification, or made its DD Form 2345 certification in bad faith. Once a temporary revocation is in place, the DoD can withhold critical technological information from the once-qualified US contractor. Furthermore, upon receipt of “substantial and credible information” that a qualified US contractor has violated US export control law, the DoD must notify the appropriate enforcement agency (i.e., State or Commerce). Notably, “substantial and credible information” is not defined in the proposed rule. Additionally, it is unclear how severe a violation of a US export control law would need to be to trigger a temporary revocation. Nevertheless, any US contractor whose qualification has been temporarily revoked may attempt to demonstrate to the DoD Component that the revocation was in error. If the DoD does not lift the temporary revocation within 20 days, the DoD can have the contractor “disqualified” from receiving critical technology owned by the DoD (the duration of disqualification is left undefined by the proposed rule).

Comments on this proposed rule must be received by December 20, 2016.