Monthly Archives: January 2016

January 11, 2016

U.S. Department of Defense Seeks Industry Input on the Negotiation of a Reciprocal Defense Procurement Pact with Japan’s Ministry of Defense

by Jason E. Prince and Steven W. Pelak
american_japanese_flagsConsistent with the United States’ and Japan’s increasing focus on joint security cooperation, the U.S. Department of Defense (“DOD”) is seeking industry input on the negotiation of a reciprocal defense procurement pact with Japan’s Ministry of Defense. On December 31, 2015, DOD issued a Federal Register notice “asking U.S. firms that have participated or attempted to participate in procurements by or on behalf of Japan’s Ministry of Defense or Armed Forces to let us know if the procurements were conducted with transparency, integrity, fairness and due process in accordance with published procedures, and if not, the nature of the problems encountered.” Additionally, DOD is “interested in comments relating to the degree of reciprocity that exists between the United States and Japan when it comes to the openness of defense procurements to offers of products from the other country.”

The United States has entered into a reciprocal defense procurement memorandum of understanding with 23 other nations. According to DOD’s notice, such agreements strive “to promote rationalization, standardization, and interoperability of conventional defense equipment with allies and other friendly governments” and “provide a framework for ongoing communication regarding market access and procurement matters that enhance effective defense cooperation.” Typically, these agreements require both countries to conduct defense procurements in accordance with specific implementing procedures and to afford each other certain benefits consistent with national laws and regulations (e.g., waivers of customs, taxes, duties, and “Buy America” requirements for end products and components of defense procurements).

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January 8, 2016

BIS Publishes Proposed Revisions to BIS Export Penalty Guidelines

by Steven Pelak and Gwen Green

complianceOn December 28, 2015, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published a proposed rule revising its guidance on charging and penalty determinations in administrative enforcement actions under the Export Administration Regulations (“EAR”). The proposed changes would bring the agency’s guidance closely in line with the Economic Sanctions Enforcement Guidelines promulgated by the Department of the Treasury, Office of Foreign Assets Control (“OFAC”) and provide greater predictability and transparency to BIS administrative penalties. The proposed revisions to the BIS’s Guidance on Charging and Penalty Determinations (Supplement No. 1 to part 766 of the EAR) are open for comment until February 26, 2016.

Alignment with OFAC Guidelines

BIS implements the EAR under the International Emergency Economic Powers Act (“IEEPA”), the same statutory authority by which OFAC implements most of its sanctions programs. Under IEEPA, criminal penalties can reach 20 years imprisonment and $1 million per violation, and administrative monetary penalties can reach $250,000 or twice the value of the transaction, whichever is greater.

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