Export Controls & the UniversityPresented by Kathy Volz

Presented at the August 2007 meeting of the Allegheny Chapter of the Society of Research Administrators

What are Export Controls?

Shorthand for a collection of regulations related to national security & foreign policy

• International Traffic in Arms Regulations– ITAR

• Export Administration Regulations – EAR• Office of Foreign Assets Control – OFAC

International Traffic in Arms Regulations

• Department of State• Military technology• US Munitions List

Export Administration Regulations

• Department of Commerce• Dual use technology • Commerce Control List

Office of Foreign Assets Control

• US Department of the Treasury• Economic and trade sanctions• Foreign policy and national security• Country Sanctions List• Specially Designated Nationals List

OFAC

• No “work around”• Sciences vs Humanities• Location, location, location• Export definition

Conferences

• 22 CFR 120.11: Through unlimited distribution at a conference, meeting, seminar, trade show or exhibition, generally accessible to the public, in the United States

• Outside the United States• “Side bar” conversations

Relationships between Regulations

• ITAR and EAR relate to technology• OFAC relates to diplomacy

ITAR EARITAR EAR

OFAC

Export Controls Continuum

• Basic → Applied → Developmental• Public Domain → Sensitive → Classified• Commercial Use → Dual Use →Military Use• Open Participation → Access Controlled• Free to Publish → No Right to Publish• University → Industry → Gov’t Facility• US → NATO member → Embargoed country

National Security Environment

• Limiting access to technology & information

• Restricting information flow• Protecting national security and

maintaining foreign relations

University Research Environment

• Open access to labs & facilities• Sharing and disseminating information• Open forum for education and

communication

University Dilemma with Export Control

• Execute mission • Protect national security • Support foreign policy initiatives

Regulatory Dilemma with Universities

• Middle of the continuum• Indistinguishable from small defense

contractors• Organization and facilities are designed for

open access• Don’t appear compliant

Critical Question

How does the University perform the research it wants to in a way that fulfills its mission and supports national security initiatives and US foreign policy?

Choices for Engagement

• Accept only unrestricted work• Accept export control restrictions

– Accept restriction wholesale– Accept restrictions on a limited basis

Export Control Touch Points

• Nature of Research: Defense-related• Source: Sponsors• Rules of Engagement: Terms & Conditions• Geography: Place of performance and/or

subject country

Nature: Defense-related Research

• Procurement – for governmental use• Assistance – advancing the state of the

practice

Nature: Penn State Defense Research

Fiscal Year 04/05• Defense Related Research Units had

$142M in research expenditures• Penn State received $145M in Department

of Defense research funding• Penn State received $13M in Department

of Energy research funding

Source: Federal & Defense Sponsors

• Clear models for procurement & assistance

• Public mandate• Conservative

Source: Industry Sponsors

• Federal and B2B procurement• No model for assistance• For-profit business model• No exemptions available• Intermediary layer between University &

Federal sponsor• Work-for-hire model

Rules of Engagement: Terms & Conditions

• Terms & conditions can invoke export controls where they otherwise wouldn’t apply

• Touch points– Proposal stage– Award stage

Fundamental Research Exemption

If a project qualifies as fundamental research:

• Exempt from ITAR & EAR export controls • Anyone can work on the project• Free to publish

Fundamental Research

22 CFR 120.11(8)Fundamental research is defined to mean basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community….

How Exemption is Lost

Terms & conditions include:• Access restriction – a restriction of who

can work on the project• Dissemination restriction – a publication

restriction.

How Exemption is Lost

• Mandate – research must be export controlled because of the nature of the work (relates to military/national security)

• Forfeit – accept terms and conditions that are not necessary for national security reasons

Mandated Loss of Exemption

Research for military use/application

• DFAR 252.204-7000• Other agreement language from the

Government

Voluntary Loss of Exemption

Publication or access restriction on work unrelated to national defense

• Prior approval of publication• Prior approval of foreign national

participation• Industry and the work-for-hire model

Handling Terms & Conditions

Do what is appropriate to the situation

• Accept• Negotiate

• Remember that OFAC is always there and not subject to negotiation

Consequences of Acceptance

• Must conduct a review to determine if the project is subject to ITAR and/or EAR

• May not be able to use foreign nationals on project

• May have to implement a security plan

Negotiation Strategies

Negotiate from a position of strength

• Acknowledge importance of export controls

• Investigate nature of research• Investigate applicability of regulations• Understand who you’re negotiating with

Who are you negotiating with?

• Faculty• Industry• Agency

Contract Technical

University

Industry

Agency

Who says it’s not fundamental?

22 CFR 120.11(8)University research will not be considered

fundamental research if: (i) The University or its researchers accept other

restrictions on publication of scientific and technical information resulting from the project or activity, or

(ii) The research is funded by the U.S. Government and specific access and dissemination controls protecting information resulting from the research are applicable.

It’s not a real publication restriction.

• Publication not allowed • Approval required before publication

• Delay for review and comment ≠ restriction• “Review and comment” ≠ restriction

• Intent is immaterial

I’m not exporting anything.

“Export” is a term of art that includes:• Actual shipment of goods• Electronic transmission of information• Verbal communication with a foreign

national• Visual “inspection” by a foreign national• Use of controlled technology abroad

Examples of Exports

• Talking about a project with a foreign national

• Giving a foreign national a tour of your facility

• Having an e-mail exchange with a foreign national

• Taking a controlled technology abroad –like a laptop computer or GPS system

Negotiating with Industry

• You haven’t started yet?• So?• Really!• Okay….• Oh well.

Negotiating with Agencies

• Not on my watch• University risk profile • Continuum• Distinguish• Carve out portion of scope

Impacts of Export Controls

• University mission• Promotion & tenure • Graduate student participation• Foreign nationals• Annual Compliance Certification to OVPR• Award processing• Sanctions

Graduate Student Participation

• About 60% of Penn State’s engineering & science graduate students are foreign nationals

• International student enrollment in US schools up for first time since 2001

Graduate Student Participation

• Publication of graduate thesis is a degree requirement

• Thesis defense must be open to the public

Graduate Student Participation

• Embargoed countries – Currently includes Cuba, Iran, North Korea, Sudan, and Syria

• ITAR – Chinese students can not participate

• EAR – Participation depends on specific technology & country

• At best, licenses are expensive & postpone project start

The Name Game

Elliott Yamin Amy WinehouseJeremy Hernandez Satveer ChaudharyMelky Cabrera Wilson BetenitGordon Brown Stephen HarperKeith Ellison Chaka FattahKoji Steven Sakai Alberto Gonzales Xiaodong Sheldon Meng

“War” Stories

• Department of Homeland Security• Understanding the SOW• FDP and export controls• Visiting scientists• Industry sponsors – negotiation with and

through• Extra-contractual assurances

Contact Information

Kathy VolzNegotiatorThe Pennsylvania State UniversityOffice of Sponsored Programs110 Technology Center BuildingUniversity Park, PA 16802814-865-6875kjv10@psu.edu