International Agreements and Government Quality Assurance

1. International Agreementsand Government Quality Assurance Barbara Glotfelty DCMA Host Nation Conference 3-5 June 2008 NATO Maintenance and Supply Agency (NAMSA) Luxembourg

2. Overview • The roles of OUSD(AT&L) Defense Procurement and Acquisition Policy • Reciprocal Government Quality Assurance Services MOUs (GQA MOUs) • DoD Authority, and Role in Oversight and Management • Relationship between GQA MOUs and Cooperative Project Agreements

3. OUSD(AT&L) DPAP ROLES IN THE INTERNATIONAL ARENA • OSD Lead for three types of International Agreements: • Reciprocal Defense Procurement MOUs • Reciprocal Government Quality Assurance Services MOUs • Reciprocal Contract Audit Services MOUs Note: These MOUs can provide baseline or reference point for elements of Project IAs • Consulted on International Cooperative Project Agreements • Prior to negotiation • Prior to conclusion • Principal OSD Staff input for USD(AT&L) approval of having another government contract on behalf of the U.S. (under Cooperative Project Agreements) • Country Desk Officers for International Contracting Matters (for all countries) • Ombudsman to address partners’ concerns about specific procurement actions • OSD Lead for Bilateral Working Groups under Declarations of Principles on: • Promoting Defense Trade (Market Access) • Rights in Data, and Proprietary Data mattersunder the“Technical Information” principle

4. OUSD(AT&L) DPAP ROLES IN THE INTERNATIONAL ARENA(continued) • OSD Subject Matter Expert (SME) on contracting aspects of any international policy issues • Includes offsets, advocacy, export controls, Foreign Military Sales • Consulted by DoD Components, other agencies, embassy staffs, industry, Congress, general public • OSD Liaison with Office of the U.S. Trade Representative, and SME on Trade Agreements and International Trade Policy • Statistics and Reports to Congress regarding DoD purchases by and from other countries • DoD Implementation of domestic preferences and restrictions on purchasing from non-U.S. sources • Includes Buy American Act, Berry Amendment, specialty metals restrictions, and others • Responsible for DFARS Part 225 re: International Acquisition (and share responsibility for FAR Part 25 with civilian agencies)

5. Reciprocal Defense Procurement Memorandum of Understanding (MOU) • Promotes rationalization, standardization, and interoperability of defense equipment with allies and other friendly governments • Establishes principles and procedures for the conduct of defense procurements and providing market access • Facilitates cooperation in R&D, production, procurement, and logistics support • Waives application of “buy national” restrictions (e.g., Buy American Act) for each other, to the extent possible • Agreements regarding topics of special interest: • Examples: Quality Assurance Services, Contract Audit Services, Security of Supply • Usually in separate MOU Annexes

6. Practical Effects of Having a Reciprocal Defense Procurement MOU • “Qualifying country” status (DFARS 225.872-1) • Special treatment vis a vis DoD implementation of Buy American Act and Balance of Payments Program policy • If DoD makes blanket public interest exception to the Buy American Act, products of the RDP MOU partner are evaluated on the same basis as U.S. products • Otherwise, DFARS 225.872-1(b) allows for DoD contracting activities to make an exception on a case-by-case basis • Customs and duties waived for deliveries under covered contracts (DFARS 225.901(1)) • Acceptable source for specialty metals delivered under DoD contracts • See pertinent clause at DFARS 252.225-7014

7. Reciprocal Defense Procurement MOUSwith 21 Countries

8. OUSD(AT&L) DPAP Role with regard to GQA MOUs • Legal authority for and content of GQA MOUs • Monitor and implement changes in legislation • Apply authority appropriate to each case • Work with OSD stakeholders on MOU language of concern (e.g., with DTSA on export control) • Consideration of new GQA MOU relationships • Whether initiated by DoD or other government • In consultation with DCMA • Request DCMA support • Rely on DCMA’s Review of a Government’s GQA Surveillance System • Coordinate with all DoD and U.S. Government stakeholders • Requesting Authority to Develop and Negotiate New or Updated GQA MOUs • Request that DCMA negotiate GQA MOUs • Requesting Authority to Conclude New or Updated GQA MOUs • Arranging for signature of concluded and approved GQA MOUs • Oversight of existing GQA MOUs, which are managed by DCMA • Supporting DCMA, as necessary, in addressing policy or procedural issues that arise

9. GQA MOUs Two categories: Reciprocal No-Charge Agreements Must be authorized by the Arms Export Control Act Reciprocal Fee-for-Service Agreements Can exist as stand-alone agreements Usually associated with Reciprocal Defense Procurement MOUs as an Annex to the RDP MOU

10. Arms Export Control ActAuthority for GQA MOUson a No-Charge Basis 22 U.S.C. 2761(h)(h) Reciprocal quality assurance, inspection, contract administrative services, and contract audit defense services; catalog data and services(1) The President is authorized to provide (without charge)quality assurance, inspection, contract administration services, and contract audit defense services under this section-(A) in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction servicesentered into after October 29, 1979, by, or under this chapter on behalf of, a foreign government which is a member of the North Atlantic Treaty Organization or the Governments of Australia, New Zealand, Japan, or Israel, if such government provides such services in accordance with an agreement on a reciprocal basis, without charge, to the United States Government; or(B) in connection with the placement or administration of any contract or subcontract for defense articles, defense services, or design and construction services pursuant to the North Atlantic Treaty Organization Security Investment program in accordance with an agreement under which the foreign governments participating in such program provide such services, without charge, in connection with similar contracts or subcontracts.

11. GQA Services • If no current agreement, and the country has an interest in investigating the possibility, we can… • Explain the DoD process for entering into a new reciprocal GQA services agreement • Provide the criteria used to determine if the GQA processes of the U.S. DoD and a potential MOU partner have the attributes required to support a reciprocal agreement • Provides information on U.S. DoD system • DCMA has a disciplined, documented process for assessing GQA systems and negotiating GQA agreements • Ensures the GQA Services Exchanged Under the Terms of a Reciprocal MOU Meets the Needs and Requirements of Both Nations

12. OSD Relies on DCMA’s Review of a Government’s GQA Surveillance System • GQA Surveillance System • Meets the Established Review Criteria • Meets Our Needs and Requirements • Improvement Opportunities Identified • U.S. Can Proceed to Negotiate a Reciprocal GQA MOU • OR – • Does Not Meet Established Review Criteria • Does Not Meet Our Needs and Requirements • Improvements Required Before U.S. Could Proceed to Negotiate a Reciprocal Agreement

13. Nations with which DoD has GQA MOUs Copies of Agreements Available athttp://www.acq.osd.mil/dpap/cpic/ic/reciprocal_procurement_memoranda_of_understanding.html NATO Nations with No-Charge Reciprocal Agreements Non-NATO Nations with Fee-for-Service Agreements Potential Future Agreements

14. *Fee-for-Service QA Agreement with non-NATO nation. Others are reciprocal no-charge agreements. ** Reciprocal no-charge for contracts under May 2008 and later FMS Cases; otherwise Fee-for-Service.

15. GQA Policy and Procedural Mattersin which OSD Gets Involved • Resources • Every no-charge QA agreement commits DCMA to provide services without reimbursement, i.e., within DCMA budget • DoD must plan to budget for needed resources in future years • Export Controls • Ensuring Host Nation QA personnel are authorized to have access to export-controlled items • By appropriate decisions, exemptions, or licenses • Resolving disconnects between GQA MOUs and Cooperative Project Agreements • When a Project Agreement provisions do not align with DoD’s GQA MOU relationships, roles, and responsibilities

16. Cooperative Project Agreements • An existing GQA MOU should be referenced in the PA and considered in determining who will perform GQA functions on contracts awarded under the Project • Each Participant’s QA specialists should review the draft text for consistency with the terms of GQA MOUs between DoD and other Participant(s) • Usually best for the PA to leverage existing protocols and practices • Problems can result when QA specialists are not involved prior to negotiation and conclusion of PAs • Where terms of individual PAs differ from terms of GQA MOU, the terms of the individual PA take precedence

17. The Contract is the Keyto ImplementationCooperative Project Agreement (PA) • The PA is a Government-to-Government agreement to accomplish a cooperative project. • A contract consistent with the terms of the PA is needed to implement the PA. • The Contracting Officer negotiates, awards, and administers the Contract. • The Contract is a Government-to-Industry agreement for performance of required work. • The Contractor performs the required work in accordance with contract terms and conditions.

18. “AC 327” • NATO Alliance Committee (AC)/327, “Life Cycle Management Group” (LCMG) • Stood up in July 2003 • Replaced/subsumed four pre-existing groups • AC/313, Acquisition Practices • AC/250, Quality • AC/325, Life Cycle Integration • AC/301, Material Standardization • Emphasis on broadening focus, with projects that encompass life cycle • Developed NATO Policy for Systems Life Cycle Management (SLCM) • Approved by North Atlantic Council • Custodianship assigned to Conference of National Armaments Directors (CNAD)

19. “AC 327” • AC 327 Initiative: Develop an Allied Acquisition Practices Publication (AACP) on Priorities and Allocation within the NATO Alliance (US Lead: Mike Vaccaro, Dept. of Commerce) • DPAP Involvement: • Available for consultation, if needed • DPAP Involvement prior to AC/327: • Active Participant in AC/313 • Involved in development “Guidance for the Drafting of MOUs and Programme MOUs” • AACP-1 of January 1989 • AACP-1 (PMOUs) of July 1987 • AACP-1 of March 1982

20. NATO Publications on Acquisition Practices in Cooperative Programs • Products of NATO Group on Acquisition Practices (AC/313): • Useful, but dated • No AC/327 initiative as yet to update such guidance