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AZ22

Department of Defense DIRECTIVE NUMBER 5230.25

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Hello we are currently working with a CNC company based in Virginia that is fully American owned and operated small business but does want to go through any  JCP certification process where I need them to make certain components for a contract that our company would like to bid on. The subcontractor has stated that they will attest to by agreement/contract that they are 1) American owned and operated fully 2) have a certified legitimate business purpose and 3) A lawful resident of the United States or any other attestation that may be needed to prove this as a fact. [Emphasis Added]
I would like to know if we should find a firm/attorney of sorts that can create a contract or form that can cover us if we disclose drawings that we receive form DLA so they could make our parts as requested?
Also see below for more information...

Department of Defense DIRECTIVE NUMBER 5230.25
5.8.  Qualified U.S. contractors who receive technical data governed by this Directive may disseminate such data for purposes consistent with their certification without the prior permission of the controlling DoD office or when such dissemination is:
5.8.1.  To any foreign recipient for which the data are approved, authorized, or licensed under E.O. 12470 (reference (b)), or the Arms Export Control Act (reference (c)).
5.8.2.  To another currently qualified U.S. contractor (as defined in paragraph 3.2., above, including existing or potential subcontractors, but only within the scope of the certified legitimate business purpose of such recipient).
3.2.  Qualified U.S. Contractor. 1   A private individual or enterprise (hereinafter described as a "U.S. contractor") that, in accordance with procedures established by the Under Secretary of Defense for Research and Engineering, certifies, as a condition of obtaining export-controlled technical data subject to this Directive from the Department of Defense, that:
3.2.1.  The individual who will act as recipient of the export-controlled technical data on behalf of the U.S. contractor is a U.S. citizen or a person admitted lawfully into the United States for permanent residence and is located in the United States.

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It sounds like you may work for a prime contractor. Not sure what in the solicitation from the Government made you focus on this Directive. Is it to be incorporated into your contract with the Government per the government solicitation? Which subparagraph are you concerned with?  A subcontractor would not be a recipient of data on behalf of the prime contractor merely by being a subcontractor. If the subcontractor was in fact receiving it "on behalf" of the prime contractor, my view is that the subcontractor would be the prime's agent, not a subcontractor. So, I question whether 3.2.1 applies.  I  am not familiar with what CNC and JPC mean and how that relates to the concern you have about the Directive. Perhaps you could elaborate a little more about that and your thinking?   

Edited by Neil Roberts
was draft form

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Thanks for the reply.....

To answer your question, this was not something the Government made us focus on, we just want to make sure that we cover ourselves. I have read lots of articles where contractors were sued civil and criminal for transporting technical data. We work as a prime contractor but we do not have the equipment to make a certain part that is needed by DLA. We have a relationship with another company (100% American owned small business) and would like to sub-contract the work out to but they have no desire to register with SAM and/or DLA. Also CNC means Computer Numerical Control and JCP- Joint Certification Program. Lastly, I have never heard the term “Prime Agent” is that the equivalent of Subcontractor? I hope this has given you a bit of clarity.

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I have no idea what SAM and DLA have to do with the issue of Export Control. All U.S. companies are required to comply with the Export Control Act because that is the law that governs all U.S., companies and people. Nothing needs to be said. It is a given. However, despite that, some prime contractors include a provision in their subcontracts to the effect that subcontractor agrees to comply with all applicable statutes, government rules, regulations and orders including those relate to United States Export Control.

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Thanks for the response,

As far as I understand JCP registration “certificate” requires you also to be registered within SAM and DLA having a cage code. I this case I just wanted to get a second opinion on how to handle subs to make sure they follow the rules since we do not want to be held liable for someone else’s negligence.

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If there was a provision in your solicitation from the government requiring you to flow down JCP, SAM or DLA requirements,  to your subcontractor, then you should. I do not know if your company is prohibited by law or contract to refrain from doing business with a subcontractor that is not JCP registered. If so, your company has some risk to consider if it does such business. If a "certified legitimate business purpose" as used in paragraph 5.8.2 is JCP registration or paragraph 3.2 certification, then your company has some risk. You may wish to consult with an expert on Export Control and this Directive. Otherwise, per this Directive, you may need to get DoD prior permission before disseminating controlled data to this subcontractor.

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