Proposed Rule2026-12019
International Traffic in Arms Regulations (ITAR): Part 130 Changes To Reduce Reporting Burden
Primary source
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Published
June 15, 2026
Issuing agencies
State Department
Abstract
In support of the policy directed in Executive Order 14268 to reduce rules and regulations involved in the development, execution, and monitoring of foreign defense sales and of arms transfer cases, the Department of State proposes to amend the International Traffic in Arms Regulations (ITAR) to modernize and streamline reporting on certain political contributions and fees or commissions.
Full Text
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<title>Federal Register, Volume 91 Issue 114 (Monday, June 15, 2026)</title>
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[Federal Register Volume 91, Number 114 (Monday, June 15, 2026)]
[Proposed Rules]
[Pages 35926-35936]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-12019]
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DEPARTMENT OF STATE
22 CFR Parts 122, 123, 124, 126, and 130
[Public Notice: 13021]
RIN 1400-AF94
International Traffic in Arms Regulations (ITAR): Part 130
Changes To Reduce Reporting Burden
AGENCY: Department of State.
ACTION: Proposed rule.
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SUMMARY: In support of the policy directed in Executive Order 14268 to
reduce rules and regulations involved in the development, execution,
and monitoring of foreign defense sales and of arms transfer cases, the
Department of State proposes to amend the International Traffic in Arms
Regulations (ITAR) to modernize and streamline reporting on certain
political contributions and fees or commissions.
DATES: Send comments on or before August 14, 2026.
ADDRESSES: Interested parties may submit comments to the Department by
any of the following methods:
<bullet> Visit the <a href="http://Regulations.gov">Regulations.gov</a> website at: <a href="https://www.regulations.gov">https://www.regulations.gov</a> and search for the docket number DOS-2026-0562.
<bullet> Email:<a href="/cdn-cgi/l/email-protection#10545444534065727c7973537f7d7d757e64635063647164753e777f66"><span class="__cf_email__" data-cfemail="1e5a5a4a5d4e6b7c72777d5d7173737b706a6d5e6d6a7f6a7b30797168">[email protected]</span></a>. Commenting parties
must include RIN 1400-AF94 in the subject line of the email message.
Comments received after that date may be considered if feasible,
but consideration cannot be assured. Those submitting comments should
not include any personally identifying information they do not desire
to be made public or information for which a claim of confidentiality
is asserted, because any such claim will be deemed waived and comments
and/or transmittal emails may be made publicly available. Parties who
wish to comment anonymously may do so by submitting their comments via
<a href="http://www.regulations.gov">www.regulations.gov</a>, leaving the fields that would identify the
commenter blank and including no identifying information in the comment
itself.
FOR FURTHER INFORMATION CONTACT: Rob Hart, Office of Defense Trade
Controls
[[Page 35927]]
Policy, Department of State, email <a href="/cdn-cgi/l/email-protection#d09494849393a5a3a4bfbdb5a283b5a2a6b9b3b590a3a4b1a4b5feb7bfa6"><span class="__cf_email__" data-cfemail="387c7c6c7b7b4d4b4c57555d4a6b5d4a4e515b5d784b4c594c5d165f574e">[email protected]</span></a>;
Subject: International Traffic in Arms Regulations: Part 130 Changes to
Reduce Reporting Burden (RIN 1400-AF94).
SUPPLEMENTARY INFORMATION: The Department of State's Directorate of
Defense Trade Controls (DDTC) administers the International Traffic in
Arms Regulations (ITAR) (22 CFR parts 120-130). The regulations
implement certain authorities of the Arms Export Control Act (AECA) (22
U.S.C. 2751 et seq.) delegated to the Secretary of State pursuant to
Executive Order 13637. In accordance with 5 U.S.C. 553(b)(4), a summary
of this rule may be found at <a href="http://www.regulations.gov">www.regulations.gov</a>.
In accordance with Sec. 39(a) of the AECA (22 U.S.C. 2779(a)), the
Secretary of State requires ``adequate and timely reporting on
political contributions, gifts, commissions and fees paid, or offered
or agreed to be paid,'' in connection with the sale or export of
certain defense articles, defense services, and design and construction
services, under AECA Sec. Sec. 22, 29, 38, and 38(j)(1)(C)(i) (22
U.S.C. 2762, 2769, 2778, and 2778(j)(1)(C)(i)) to or for the armed
forces of a foreign country or international organization. Part 130 of
the ITAR implements AECA Sec. 39(a), governing the reporting of
covered political contributions and fees or commissions, and related
recordkeeping. While AECA Sec. 39 references ``political
contributions, gifts, commissions and fees,'' the ITAR defines ``Fee or
commission'' and ``Political contribution'' at Sec. 130.5 and Sec.
130.6, respectively, to collectively include the reference to
``gifts,'' as well as two terms not explicit in the statute, ``loan''
and ``donation.'' In this preamble, the Department will use the phrase
``political contributions and fees or commissions'' to encompass the
collective activities defined in those two sections and implementing
the text of AECA Sec. 39(a). Similarly, in this preamble, the
Department will use the term ``payment'' to include gifts, loans,
donations, and in-kind transactions.
Pursuant to Sec. 130.9(a), an applicant (as defined in Sec.
130.2) must inform DDTC as to whether the applicant or its vendors (as
defined in Sec. 130.8) have paid, or offered or agreed to pay, in
respect of any sale: (1) political contributions in an aggregate amount
of $5,000 or more; or (2) fees or commissions in an aggregate amount of
$100,000 or more. If an applicant or their vendors has paid, or offered
or agreed to pay, such payments relating to a qualifying transaction,
the applicant must report to DDTC the information specified in Sec.
130.10 (herein referred to as a ``part 130 report''). Reporting this
information to DDTC, or providing a satisfactory explanation as to why
the information cannot be reported at that time, is a condition
precedent to the granting of the relevant license or approval.
Similarly, under Sec. 130.9(b), a supplier (as defined in Sec. 130.7)
must also inform DDTC as to whether the supplier or its vendors have
paid, or offered or agreed to pay, political contributions or fees or
commissions in the same amounts. If so, the supplier must submit a part
130 report to DDTC ``no later than 30 days after the contract award to
such supplier, or such earlier date as may be specified by the
Department of Defense.''
The Department proposes to amend part 130 and related sections of
the ITAR to reduce the reporting burden on the regulated community by
raising the threshold value to which part 130 requirements apply and
the aggregate totals that require reporting, to streamline the
reporting process by consolidating submissions to an annual report, and
to create a more efficient system for both the regulated community and
the Department by introducing a standardized form.
Background
The Department last raised the threshold value for defense articles
or defense services to which the requirements in part 130 apply (herein
referred to as the ``value threshold'') from $250,000 to $500,000 on
July 22, 1993 (58 FR 39280). The Department now proposes to raise the
value threshold from $500,000 to $1,000,000. To determine the new
threshold amount, the Department used the U.S. Bureau of Labor
Statistics Consumer Price Index (CPI) to assess the cumulative impact
of inflation since 1993. According to the CPI calculator on the Bureau
of Labor Statistics website (<a href="https://www.bls.gov/data/inflation_calculator.htm">https://www.bls.gov/data/inflation_calculator.htm</a>), $500,000 in July 1993 would have the same
buying power as $1,140,434.78 in January 2026. The proposed value
threshold increase, from $500,000 to $1,000,000, is rounded down from
the calculated adjustment for inflation to maintain a memorable number
for compliance for the regulated community, while modernizing the
requirement.
The Department also proposes to raise the aggregate total of
political contributions that must be reported to DDTC from $5,000 to
$10,000, as reflected in proposed paragraphs Sec. 130.9(a)(1) and
(c)(1). Additionally, the Department proposes to raise the aggregate
total of fees or commissions that must be reported to DDTC from
$100,000 to $200,000, as reflected in proposed paragraphs Sec.
130.9(a)(2) and (c)(2). Increasing these amounts by 100% would maintain
the 1:100 ratio between the aggregate total of political contributions
and the value threshold for defense articles or defense services
(currently $5,000 to $500,000; proposed $10,000 to $1,000,000) and the
1:5 ratio between the aggregate total of fees or commissions and the
value threshold (currently $100,000 to $500,000; proposed $200,000 to
$1,000,000). Furthermore, the Department would raise the miscellaneous
payment thresholds in Sec. 130.10(c)(1) and (c)(2) to half of the
proposed aggregate totals in order to maintain the 1:2 ratio between
those values. The threshold below which a payment may be labeled a
miscellaneous political contribution would increase from $2,500 to
$5,000 and the threshold below which a payment may be labeled a
miscellaneous fee or commission would increase from $50,000 to
$100,000.
In addition to the proposed updates to the value and payment
thresholds in part 130, the Department proposes to streamline the
reporting process altogether to improve efficiency and reduce common
reporting errors. The current requirement that an applicant's part 130
report accompany an application for authorization and a supplier's part
130 report be submitted within 30 days of contract award, or as
specified by the Department of Defense, can result in applicants and
suppliers reporting estimated and forecasted payments, and offers and
agreements of payments, particularly those which may be contingent upon
a future license or contract award, or various other factors. These
estimates may or may not be updated with accurate values in a
supplementary report. The supplementary report, for example, may not
always clarify whether it was submitted to make a correction to a
previously reported payment or to add an additional payment, leading to
duplicative reporting. In other cases, DDTC has received part 130
reports that include information on political contributions or fees or
commissions collectively described as ``paid, or offered or agreed to
be paid,'' failing to indicate whether a particular fee has been paid
or whether it was only offered or agreed to be paid.
The lack of consistency and standardization of part 130 reports
received by the Department impacts the accuracy of the reports provided
to Congress pursuant to AECA Sec. 36(a). As such, in order to produce
the information required by Sec. 36(a), the
[[Page 35928]]
Department must conduct an extensive manual review of every report it
receives from the regulated community.
The Department's position is that ``adequate and timely'' reporting
required by AECA Sec. 39(a) can be achieved through an annual
submission process as proposed by this rule. The revisions to the ITAR
proposed by this rule would not only improve the ease of compliance
with the requirements of part 130, but would also improve the reporting
process for the regulated community and the accuracy of the resulting
information collected by the Department.
Analysis
In 2020, the Department initiated a review of the process for
reporting political contributions and fees or commissions to determine
how to improve the information collected pursuant to part 130 in order
to better inform the Department and Congress. To support this effort,
the Department tasked the Defense Trade Advisory Group (DTAG), a
federal advisory committee, with proposing recommendations to address
challenges related to reporting and compliance with part 130. Based on
the DTAG's recommendations and the Department's own analyses, the
Department determined that duplicative reporting across multiple
programs or products, over-reporting based on estimates, and the
absence of a standard form affect the accuracy of the information.
The Department intends to improve the process for reporting
pursuant to part 130 by proposing a new form to standardize submissions
and changing to a single report that would be submitted to DDTC at the
time of an applicant's or supplier's annual registration renewal under
part 122 of the ITAR. A supplier that is not registered with DDTC under
part 122 would report by the end of the federal fiscal year, September
30. The Department would no longer require a statement regarding part
130 to be made in an application for authorization under ITAR parts
123, 124, and 125; thus, the section relating to compliance with part
130 would be removed from the DSP-5, DS-6004, and DSP-85 forms.
The new part 130 annual reporting form would include distinct
fields for applicants and suppliers to provide payments and offers or
agreements, and, for example, to indicate repeating entries, allowing
industry to better communicate different or unique scenarios, such as
recurring payments and offers across multiple sales. Currently, DDTC
receives part 130 reports under the approved information collection
``Statement of Political Contributions, Fees, and Commissions Relating
to Sales of Defense Articles and Defense Services'' (OMB Control
Number: 1405-0025), without a standard form. For this reason, DDTC
receives submissions in various formats with inconsistent levels of
detail, requiring significant labor to manually process the information
for congressional reports and compliance purposes. The inconsistent
formatting and information reported often requires DDTC to contact the
applicant or supplier with questions or clarifications. A standardized
form would reduce errors during the initial submission process,
decreasing the need for the Department to follow-up with applicants or
suppliers.
The standardized form would improve the reporting process and the
accuracy of the information collected by the Department. The proposed
change to an annual submission would enable applicants and suppliers to
review the previous 12 months of relevant activity and report based on
what has occurred during that time, rather than on forecasts or
estimates. Finally, consolidating reporting into a single annual
submission would simplify the reporting process for entities managing
numerous reports across multiple programs or subsidiaries.
Proposed Implementation
An applicant or supplier that pays, or offers or agrees to pay,
political contributions or fees or commissions in aggregate totals
specified in Sec. 130.9 would still be required to furnish that
information to DDTC. Instead of furnishing the information with a
request for authorization under parts 123, 124, and 125, or within 30
days of a contract award to a supplier, as under the current
regulations, the Department proposes that information be furnished in
an annual report submitted to DDTC with the applicant's or supplier's
registration renewal. If a supplier is not registered with DDTC, the
report would be due by September 30 of the relevant year (to coincide
with the closing of the Department financial year). The requirement for
the annual report is described in proposed paragraphs Sec. 130.9(a)
and (c). If an applicant or supplier does not pay, or offer or agree to
pay, political contributions or fees or commissions in qualifying
aggregate totals during a reporting period, the applicant or supplier
would not be required to furnish an annual report for that period. If a
vendor elects to furnish information directly to DDTC under Sec.
130.12(c), the vendor would submit such report at the time of the
vendor's annual registration renewal; if a vendor is not registered
with DDTC pursuant to part 122, the report would be due by the end of
the federal fiscal year, September 30.
If an applicant or supplier needs to correct or amend a previous
report or submit a report for a previous reporting period, proposed
Sec. 130.11 would contain two reporting requirements distinct from the
proposed annual submission--a supplementary report and an interim
report. Under the proposed regulations, a supplementary report would
only be required as described in proposed paragraphs (a)(1) and (a)(2).
A supplementary report described in proposed paragraph (a)(1) would be
required when new information, or a subsequent development,
necessitates an amendment, correction, or supplement to an annual
report that was already furnished to DDTC for a previous reporting
period. Subsequent developments that would necessitate a supplementary
report include, for example: an applicant discovering that a payment
made during a previous reporting period was not included in the
appropriate report; or a payment actually made is substantially
different than the previously reported estimate. A supplementary report
described in proposed paragraph (a)(2) would be required if DDTC
requests additional information regarding miscellaneous payments.
The requirement in current paragraph (a)(1) for applicants and
suppliers to submit a supplementary report to DDTC when certain
political contributions or fees or commissions not previously reported
are paid, or offered or agreed to be paid, in connection with a sale
for which the applicant or supplier has previously been required to
furnish information, would no longer be necessary because that
information would be captured in the annual reporting requirement. For
that reason, proposed paragraph (a)(1) would replace the current
paragraph (a)(1). Under the proposed regulations, an applicant or
supplier would submit an annual report to DDTC that includes
information on payments, or offers or agreements to pay, that have
occurred since the date of their most recent part 130 report, even if,
for example, previous payments were reported with respect to that same
authorization in a prior year.
An interim report, as described in proposed paragraphs (c) and (d),
would be required when new information creates an obligation for an
applicant or supplier to furnish an annual report to DDTC for a
previous reporting period
[[Page 35929]]
and the applicant or supplier did not furnish an annual report to DDTC
for that period. New information that would necessitate an interim
report includes, for example, an applicant discovering that its vendors
have paid a commission with respect to a qualifying sale in an amount
that required a report to DDTC, after the applicant renewed its
registration and did not submit a report.
Both a supplementary report under (a)(1) and an interim report
under (c) would be required to be furnished to DDTC within 30 days of
discovering the new information or subsequent development. A
supplementary report under (a)(2) would be required to be furnished to
DDTC within 30 days of the request from DDTC.
If an applicant or supplier ceases to operate, or their
registration expires, the Department would require a part 130 report be
submitted to DDTC within 30 days of their registration expiration date
or within 30 days of the cessation of operations, to include all
information since their last report. In the case of a merger or
acquisition of registrants, the parent, acquiring entity, or new entity
that maintains the registration number would be responsible for
reporting all of the information required under part 130 not yet been
reported by the absorbed or acquired entity. The parent, acquiring
entity, or new entity would be required to make an initial part 130
report of the absorbed or acquired entity's information no later than
six months after the effective date of the merger or acquisition. The
parent, acquiring entity, or new entity would be able to report at the
time of its registration renewal, if that renewal occurs within six
months of the effective date of the merger or acquisition. After the
initial report of the absorbed or acquired entity's information, the
parent, acquiring entity, or new entity would then be required to
report all subsequent activities for any and all subsidiaries with the
annual submission during its registration renewal. In the event an
entity is sold or restructured more than once in the six-month time
period, the obligation to report its prior information to DDTC within
six months of the effective date of the original merger or acquisition
would remain with the original parent, acquiring entity, or new entity.
Each new purchaser or new entity would be required to report all
historical information for absorbed or acquired entities not yet been
reported to DDTC.
General Revisions
In addition to the proposed substantive changes, the Department
takes this opportunity to propose additional revisions to continue the
Department's ITAR reorganization efforts initiated by 87 FR 16396 (Mar.
23, 2022). In keeping with those efforts, the Department further
proposes to clarify, organize, and eliminate duplicative text
throughout the ITAR in sections that are within part 130 and those that
reference part 130. The following proposed revisions incorporate both
substantive changes and reorganization efforts; however, where there is
purely a clarifying or organizational revision and no change in policy
or scope of the regulation, it will be indicated as such. The
Department notes that there are other minor changes in part 130 that
will be addressed in a future rulemaking; as such, the Department does
not address those minor changes here.
Throughout part 130, the Department proposes to remove each
reference to ``license or approval'' and add in its place
``authorization.'' This revision is to make consistent references to
licenses and the controlled activities for which they are issued and
does not implement a change in policy or regulation. The Department
proposes to revise acronyms and initialisms in part 130 to follow a
standard format. Where a single term for which there is a known acronym
appears on more than two occasions within any one section, the first
instance is followed by a parenthetical containing the acronym and
subsequent use of the term is by acronym. This provides consistency of
format without sacrificing clarity and limits unnecessary text.
Section-Specific Revisions
The Department proposes to amend Sec. 122.4 by adding note 3 to
paragraph (c), which would reference the six-month part 130 reporting
requirement applicable to mergers and acquisitions, in order to assist
industry with the new requirement. Section 123.1 would be amended by
removing paragraph (c)(6) in order to remove the requirement that a
statement concerning the payment of political contributions and fees or
commissions accompany an application for permanent export. Switching to
an annual report would eliminate the need for this statement to be
included in an application for authorization. For the same reason, the
Department also proposes to amend Sec. 124.12(a)(6) by striking the
last sentence that requires letters of transmittal to include a
statement pursuant to part 130.
The Department proposes to amend Sec. 126.16 and Sec. 126.17
(exemptions that implement the Defense Trade Cooperation Treaty between
the United States and Australia and the Defense Trade Cooperation
Treaty between the United States and the United Kingdom, respectively),
to revise paragraph (m) relating to political contributions and fees or
commissions in both sections. The Department proposes to remove the
reference to ``Sec. 130.10'' and add in its place ``Sec. 130.9,'' and
to remove the threshold amount. Section 130.10 specifies the
information that is required to be submitted to DDTC, while Sec. 130.9
contains the relevant obligation to report to DDTC. The obligation to
furnish the information specified in Sec. 130.10 exists only for
defense articles or defense services valued at the threshold amount
defined in part 130, thus adequately conveying the requirements and
making the specific references in Sec. Sec. 126.16-.17 to both the
information that must be reported and the threshold unnecessary.
In Sec. 130.2, the Department proposes to clarify within the
definition of ``applicant'' that an applicant includes a person who
applies for authorization, who is issued authorization, and a person
who utilizes or plans to utilize one of the exemptions implementing the
Defense Trade Cooperation Treaties in Sec. 126.16 or Sec. 126.17. In
Sec. Sec. 130.2, 130.7, and 130.8, the Department proposes to increase
the $500,000 threshold to $1,000,000 for the reasons explained in this
preamble. The Department proposes to move the section defining
``political contribution'' from Sec. 130.6 to Sec. 130.5 and the
section defining ``fee or commission'' from Sec. 130.5 to Sec. 130.6,
to match the order in which the terms are used in the AECA and their
initial implementation in the ITAR (41 FR 40608 (Sept. 16, 1976)). This
proposed revision is organizational and would not impact the scope of
the definitions.
The Department proposes to revise the section headings for Sec.
130.9 and Sec. 130.10, to simplify and better describe the contents in
each section. The proposed changes to these section headings would not
impact the scope of the regulations. The section heading for Sec.
130.9 would be revised from ``Obligation to furnish information to the
Directorate of Defense Trade Controls.'' to ``Annual reporting
requirement.'' The section heading for Sec. 130.10 would be revised
from ``Information to be furnished by applicant or supplier to the
Directorate of Defense Trade Controls.'' to ``Required information.''
In Sec. 130.9 through Sec. 130.12, the Department proposes to add a
unique paragraph heading for each paragraph to indicate its subject--a
standard convention to assist readers with the regulations.
Additionally, in Sec. 130.9, the Department proposes the following
[[Page 35930]]
revisions in order to implement the substantive changes discussed
herein and also reorganize and clarify existing text:
[ssquf] Restructuring paragraph (a), which describes the
applicant's obligation to report information to DDTC, to mirror the
structure of the paragraph regarding the supplier's obligation to
report to DDTC (current paragraph (b)) by redesignating current
paragraphs (a)(1), (a)(1)(i), and (a)(1)(ii), as paragraphs (a),
(a)(1), and (a)(2); and subsequently removing paragraphs (a)(1)(i) and
(a)(1)(ii).
[ssquf] Raising the aggregate total for political contributions in
proposed paragraph (a)(1) from $5,000 to $10,000 and the aggregate
total for fees and commissions in proposed paragraph (a)(2) from
$100,000 to $200,000 for the reasons discussed in the preamble.
[ssquf] Redesignating current paragraph (a)(2) as new paragraph
(a)(3).
[ssquf] Removing the text requiring applicants and suppliers to
furnish the information specified in Sec. 130.10 to DDTC from the
paragraph setting the aggregate threshold for reporting fees or
commissions (proposed paragraphs (a)(2) and (c)(2)) and placing it into
its own paragraph (proposed paragraphs (b) and (d)). This text would
also be revised to reflect the annual reporting process.
[ssquf] Redesignating current paragraph (b)--the obligation for
suppliers to report to DDTC--as paragraph (c); redesignating current
paragraph (c)--relating to the computation of political contributions--
as new paragraph (e) and revising for clarity; and redesignating
current paragraph (d)--the obligation to furnish new information to
DDTC--as new paragraph (f).
[ssquf] Revising new paragraph (f) to indicate that when an
applicant or supplier discovers new information about a previous
reporting period, the applicant or supplier may be required to submit a
supplementary or interim report pursuant to Sec. 130.11.
[ssquf] Adding new paragraph (g) regarding reporting requirements
when there is a registration expiration, cessation of operations,
merger, or acquisition.
[ssquf] Adding new paragraph (h) to require applicants and
suppliers to submit the report using the new standardized form provided
by DDTC and to submit the form using a system accessible through the
DDTC website.
The Department proposes to amend Sec. 130.10 by making editorial
revisions to the introductory text in paragraph (a) for clarity, and
adding the requirement that the part 130 report be signed by a senior
officer (e.g., chief executive officer, president, secretary, partner,
member, treasurer, general counsel) who has been empowered by the
applicant or supplier to sign such documents. The Department also
proposes to add new paragraph (e), which would require that the part
130 report include a certification that the submission is complete and
accurate made by the senior officer. Currently, part 130 reports are
generally submitted with an application for authorization, which
requires a signature and certification from an empowered official. The
proposed paragraphs (a) and (e) would maintain a similar requirement as
part of the new form proposed herein. The Department also proposes to
revise paragraph (a)(1) to require that the part 130 report include the
DDTC authorization number, applicable exemption, or Department of
Defense contract or case number, and the end-item associated with the
sale. Because part 130 reports would no longer be provided with the
request for authorization, the Department would instead collect the
authorization number and a description of the end-item through the
annual submission. Similarly, the Department would collect the
applicable ITAR exemption or the Department of Defense contract or case
number, in order to associate the relevant transaction with the annual
submission. Additionally, the Department proposes to revise the
introductory text in paragraphs (a)(4) and (b) to remove the reference
to a ``statement,'' because the information would be provided in the
proposed submission form, rather than a statement. The Department
proposes to update the miscellaneous payment thresholds in paragraphs
(c)(1) and (c)(2) for the reasons described in the preamble.
The Department proposes revisions to Sec. 130.11 to modify
supplementary reporting and create a new type of interim reporting as
described in the preamble above. Accordingly, the section heading would
be revised from ``Supplementary reports.'' to ``Supplementary and
interim reports.'' Current paragraph (a)(1)--which requires applicants
and suppliers to submit a supplementary report to DDTC when certain
political contributions or fees or commissions not previously reported
are paid, or offered or agreed to be paid--would be duplicative with an
annual submission process; therefore, the text of that paragraph would
be removed. For the same reason, the Department proposes to redesignate
paragraph (a)(2) as paragraph (a)(1) with revisions described above,
redesignate paragraph (a)(3) as paragraph (a)(2), and remove paragraph
(a)(3).
Additionally within Sec. 130.11, the Department proposes to remove
both current paragraphs (b)(1) and (b)(2) because the text in paragraph
(b)(1) can be incorporated into proposed paragraph (b) and the required
information listed in paragraph (b)(2) would be required in proposed
Sec. 130.10. New paragraphs (c) and (d) would be added to require the
interim reporting process as described above. New paragraph (e) would
be added to clarify that furnishing a supplementary report or an
interim report under Sec. 130.11 does not relieve an applicant or
supplier from any obligation to furnish an annual report to DDTC under
Sec. 130.9.
The Department proposes to amend Sec. 130.12 by making editorial
revisions in paragraph (a). The Department proposes to revise paragraph
(c)--which offers vendors the option to furnish information directly to
DDTC and submit an abbreviated statement to applicants and suppliers--
to reflect the annual submission process. If a vendor elects to furnish
information directly to DDTC, the vendor would submit such report at
the time of the vendor's annual registration renewal; if a vendor is
not registered with DDTC pursuant to part 122, the report would be
submitted by the end of the federal fiscal year, September 30. The
Department proposes organizational edits to paragraph (d), so that its
structure matches other sections in part 130. Paragraph (d)(1) would be
redesignated as paragraph (d); paragraphs (d)(1)(i), (d)(1)(ii), and
(d)(1)(iii) would be redesignated as paragraphs (d)(1), (d)(2), and new
paragraph (d)(3). Consequently, current paragraph (d)(2) would be
redesignated as new paragraph (e). The revisions to paragraph (d) and
addition of paragraph (e) do not reflect a change in policy or
regulation.
Example Reporting Scenarios
The following scenarios exemplify how reporting would be required
under the proposed regulations as described in this proposed rule:
Example 1
In January through June 2026, Company A obtains a technical
assistance agreement (TAA) that expires in 10 years, a manufacturing
licensing agreement (MLA) that expires in 10 years, a DSP-73
authorization for temporary export, and a DSP-5 authorization for
permanent export. The TAA and the DSP-5 meet the requirements of Sec.
130.2 because both involve defense articles and defense services valued
at over $1,000,000, which are being sold commercially to the armed
forces of a foreign country. In
[[Page 35931]]
that same time period, Company A offered four fees in a qualifying
aggregate total with respect to the TAA and paid one commission above
the qualifying total with respect to the TAA. No payments, or offers or
agreements to pay, were made in connection with the DSP-5. Company A
plans to renew their registration under part 122 with DDTC in October
2026. Under the proposed regulations, Company A would be required to
furnish an annual report to DDTC pursuant to Sec. 130.9(a)(2). In the
annual report, Company A would be required to include the information
specified in Sec. 130.10 with respect to the four offers of fees and
the payment of the commission in connection with the TAA. Company A
would not be required to include information with respect to the DSP-5
that meets the requirements of Sec. 130.2 because no payments, or
offers or agreements to pay, were made in connection with that
authorization.
Example 2
Using the same facts from the previous example, Company A renews
its registration with DDTC in October 2026 and furnishes the
appropriate annual report pursuant to Sec. 130.9. In January 2027,
Company A pays two political contributions in a qualifying aggregate
total in connection to the same 2025 TAA that it included in its annual
report to DDTC the prior year. Under the proposed regulations, in
October 2027, Company A would be required to furnish to DDTC the
information specified in Sec. 130.10 with respect to the two payments
of political contributions in its annual report submitted during
registration renewal.
Example 3
Using the same facts from the previous example, on March 1, 2028,
Company A discovers that it paid a fee in a qualifying aggregate total
with respect to the DSP-5 it obtained in 2025. On March 10, 2028,
Company A offers two commissions in a qualifying aggregate total with
respect to a new MLA that meets the requirements of Sec. 130.2. Under
proposed Sec. 130.11(a)(1), Company A would be required to furnish to
DDTC a supplementary report within 30 days of March 1, 2028, that
includes the information specified in Sec. 130.10 with respect to the
DSP-5 obtained in 2025 and an explanation as to why Company A did not
furnish this information at the time it submitted its annual report for
that year. Company A would also be required to furnish its annual
report in October 2028 during registration renewal and include the
information specified in Sec. 130.10 with respect to the payments made
relating to the new MLA.
Example 4
In February 2026, Company B obtains a TAA that expires in 10 years
that meets the requirements of Sec. 130.2, but Company B does not make
payments, or offers or agreements to pay, political contributions or
fees or commissions in relation to that TAA. Company B renews its
registration with DDTC in April 2026 and, under the proposed
regulations, would not be required to furnish an annual report to DDTC
pursuant to Sec. 130.9. From April 2026 to April 2027, Company B does
not apply for or obtain authorizations that meet the requirements of
Sec. 130.2. However, in April 2027, Company B discovers that, in March
2026, Company B had paid one political contribution above the
qualifying total with respect to the 2026 TAA. Pursuant to the proposed
Sec. 130.11(c), Company B would be obligated within 30 days of this
discovery to furnish to DDTC an interim report that includes the
information specified in Sec. 130.10 with respect to the 2026 TAA and
an explanation as to why Company B did not furnish this information at
the time it renewed its registration. Company B would not be required
to file an annual report in April 2027 because Company B did not make
any payments or offers or agreements to pay since its most recent
registration renewal.
Comments Requested
The Department encourages the public to provide comments directly
related to this proposed rule and provide responses to the questions
presented herein. To facilitate timely review and assessment, comments
should be provided in a concise sentence or paragraph, followed by
supporting explanatory paragraphs and examples, with each distinct
comment treated separately, as opposed to multiple comments in one
paragraph or section. The Department specifically requests comments on
the following matters:
1. Do you foresee any operational, administrative, or compliance
challenges with the change to annual part 130 reporting?
2. With this rule, the Department would be revising an existing
collection of information under OMB control number 1405-0025 titled
Statement of Political Contributions, Fees, and Commissions Relating to
Sales of Defense Articles and Defense Services to add a new form. This
proposed form would utilize existing systems accessible through the
DDTC website. Information regarding this collection of information--
including all current supporting materials--can be found at <a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a> by using the search function to enter
either the title of the collection or the OMB Control Number. The
Department requests comment on the draft version of the form, available
at regulations.gov (see Docket information under ADDRESSES, above).
3. Considering different reporting scenarios, do you anticipate any
difficulties with using the proposed form to submit information
pursuant to part 130? Note that the form at the link is mockup of a web
application and applicants and suppliers would not submit the actual
form as a PDF.
4. Do you expect that annual reporting and the standard form would
result in a more precise and accurate accounting of the appropriate
payments?
5. Do the proposed changes in this rule alleviate any difficulties
that you currently experience when reporting information pursuant to
part 130? If not, why?
Regulatory Analysis and Notices
Administrative Procedure Act
This rulemaking is exempt from the rulemaking requirements of Sec.
553 of the Administrative Procedure Act (APA) (5 U.S.C. 553) pursuant
to Sec. 553(a)(1) as a military or foreign affairs function of the
United States. Nevertheless, and without prejudice to this
determination, the Department elects to seek public comment on this
rule.
Regulatory Flexibility Act
Since this rule is exempt from the notice-and-comment rulemaking
provisions of 5 U.S.C. 553, it does not require analysis under the
Regulatory Flexibility Act.
Unfunded Mandates Reform Act of 1995
This rulemaking does not involve a mandate that will result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector of $100 million or more in any year and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.
Executive Orders 12372 and 13132
This rulemaking will not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in
[[Page 35932]]
accordance with Executive Order 13132, it is determined that this
amendment does not have sufficient federalism implications to require
consultations or warrant the preparation of a federalism summary impact
statement. The regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this rulemaking.
Executive Orders 12866 and 13563
Executive Order 12866, as amended by Executive Order 13563, directs
agencies to assess all costs and benefits of available regulatory
alternatives and, if regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety effects, distributive impacts,
and equity). Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. The Department specifically
welcomes public comment on the impact, including costs and benefits, of
this rule. After review by the Office of Management and Budget (OMB),
this rule has been deemed a significant regulatory action.
The Department believes that this proposed rule, if finalized, will
result in a decrease in burden on the regulated entities. See the
discussion of the Paperwork Reduction Act, below.
Executive Order 12988
The Department of State has reviewed this rulemaking in light of
sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate
ambiguity, minimize litigation, establish clear legal standards, and
reduce burden.
Executive Order 13175
The Department of State has determined that this rulemaking will
not have tribal implications, will not impose substantial direct
compliance costs on Indian tribal governments, and will not preempt
tribal law. Accordingly, the requirements of Executive Order 13175 do
not apply to this rulemaking.
Executive Order 14192
This rule is exempt from the requirements of Executive Order 14192
because it relates to a foreign affairs or national security function
of the United States.
Paperwork Reduction Act
The Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.) requires
all Federal agencies to analyze proposed regulations for potential
burdens on the regulated community created by provisions in the
proposed regulations that require the submission or retention of the
information. The information collection requirements must be submitted
to the Office of Management and Budget (OMB) for approval. Persons are
not required to respond to a collection of information unless it
displays a currently valid OMB control number.
This proposed rule contains proposed revisions to the information
collection currently approved under OMB control number 1405-0025,
Statement of Political Contributions, Fees, and Commissions Relating to
Sales of Defense Articles and Defense Services.
Summary of Proposed Changes to the Collection
In addition to the current information collection requirements
contained in Sec. 130.10, this proposed rule would make the following
modifications to the information collection:
<bullet> Creation of a form for submission of the information.
<bullet> Change to an annual submission requirement, rather than a
requirement to submit with an application for authorization.
<bullet> Adding a description of the end-item as well as the DDTC
authorization number, ITAR exemption, or Department of Defense contract
or case number to the information collected.
The revisions in this proposed rule would reduce the number of
estimated respondents, based on the calculations from the proposed
increase to the monetary thresholds, from 57 to 47. While there would
be an increase in estimated response time per respondent from one hour
to five hours due to changing to an annual submission, the number of
responses would significantly decrease from 450 to 47 for that same
reason. Finally, the estimated total burden time would decrease by
nearly half, from 450 hours to 235 hours.
According to the Department of Labor's Bureau of Labor Statistics,
the average hourly wage (weighted) for a ``Compliance Officer'' is
$81.72.\1\ This was calculated by multiplying the average hourly wage
($40.86) by 2 to account for overhead costs. Therefore, the Department
estimates the annual hour-cost burden to applicants to be $19,204.20
(235 annual burden hours x $81.72), a 48 percent decrease from the
current hour-cost burden.
---------------------------------------------------------------------------
\1\ Source: Bureau of Labor Statistics; Occupational Employment
Statistics <a href="https://www.bls.gov/oes/current/oes131041.htm">https://www.bls.gov/oes/current/oes131041.htm</a>.
---------------------------------------------------------------------------
The resultant new estimated total burdens for OMB Control Number
1405-0025 are described below.
<bullet> Title of Information Collection: Statement of Political
Contributions, Fees, and Commissions Relating to Sales of Defense
Articles and Defense Services.
<bullet> OMB Control Number: 1405-0025.
<bullet> Type of Request: Revision of Currently Approved
Collection.
<bullet> Originating Office: Bureau of Political-Military Affairs,
Directorate of Defense Trade Controls, PM/DDTC.
<bullet> Respondents: Individuals, businesses, or organizations who
have paid, or offered or agreed to pay, political contributions or fees
or commissions in certain aggregate totals with respect to defense
articles or defense services valued in an amount of $1,000,000 or more
that are being sold commercially to or for the use of the armed forces
of a foreign country or international organization or individuals,
businesses, or organizations who enter into a contract with the
Department of Defense for the sale of defense articles or defense
services valued in an amount of $1,000,000 or more under section 22 of
the AECA.
<bullet> Estimated Number of Respondents: 47.
<bullet> Estimated Number of Responses: 47.
<bullet> Average Time per Response: 5 hours.
<bullet> Total Estimated Burden Time: 235 hours.
<bullet> Frequency: Annually.
<bullet> Obligation to Respond: Mandatory.
We are soliciting public comments to permit the Department to:
<bullet> Evaluate whether the proposed information collection is
necessary for the proper functions of the Department.
<bullet> Evaluate the accuracy of our estimate of the time and cost
burden for this proposed collection, including the validity of the
methodology and assumptions used.
<bullet> Enhance the quality, utility, and clarity of the
information to be collected.
<bullet> Minimize the reporting burden on those who are to respond,
including the use of automated collection techniques or other forms of
information technology.
Please note that comments submitted in response to this Notice are
public record. Before including any detailed personal information, you
should be aware that your comments as submitted, including your
personal information, will be available for public review.
[[Page 35933]]
Methodology
Respondents would submit information electronically through DDTC's
electronic system using the new form proposed by this rule.
List of Subjects
22 CFR Parts 122 and 123
Arms and munitions, Exports, Reporting and recordkeeping
requirements.
22 CFR Part 124
Arms and munitions, Exports, Technical assistance.
22 CFR Part 126
Arms and munitions, Exports, Reporting and recordkeeping
requirements, Technical assistance.
22 CFR Part 130
Arms and munitions, Campaign funds, Confidential business
information, Exports, Reporting and recordkeeping requirements.
Accordingly, for the reasons set forth above and under the
authority of 22 U.S.C. 2778, 2779 the Department of State proposes to
amend title 22, chapter I, subchapter M, parts 122, 123, 124, 126, and
130 as follows:
PART 122--REGISTRATION OF MANUFACTURERS AND EXPORTERS
0
1. The authority citation for part 122 continues to read as follows:
Authority: Sections 2 and 38, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.
0
2. Amend Sec. 122.4 by adding note 3 to paragraph (c) to read as
follows:
Sec. 122.4 Notification of changes in information furnished by
registrants.
* * * * *
(c) * * *
Note 3 to paragraph (c):
Information on political contributions and fees or commissions, as
required by part 130 of this subchapter, must be reported to the
Directorate of Defense Trade Controls in accordance with Sec.
130.9(g).
* * * * *
PART 123--LICENSES FOR THE EXPORT AND TEMPORARY IMPORT OF DEFENSE
ARTICLES
0
3. The authority citation for part 123 continues to read as follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744
(22 U.S.C. 2752, 2778, 2797); 22 U.S.C. 2753; 22 U.S.C. 2651a; 22
U.S.C. 2776; Pub. L. 105-261, 112 Stat. 1920; Sec. 1205(a), Pub. L.
107-228; Sec. 520, Pub. L. 112-55; Section 1261, Pub. L. 112-239;
E.O. 13637, 78 FR 16129.
0
4. Amend Sec. 123.1 by removing paragraph (c)(6):
Sec. 123.1 Requirement for export or temporary import licenses.
* * * * *
(c) * * *
(6) [removed]
* * * * *
PART 124--AGREEMENTS, OFF-SHORE PROCUREMENT, AND OTHER DEFENSE
SERVICES
0
5. The authority citation for part 124 continues to read as follows:
Authority: Secs. 2, 38, and 71, Pub. L. 90-629, 90 Stat. 744 (22
U.S.C. 2752, 2778, 2797); 22 U.S.C. 2651a; 22 U.S.C. 2776; Section
1514, Pub. L. 105-261; Pub. L. 111-266; Section 1261, Pub. L. 112-
239; E.O. 13637, 78 FR 16129.
0
6. Amend Sec. 124.12 by revising paragraph (a)(6) as follows:
Sec. 124.12 Required information in letters of transmittal.
(a) * * *
(6) A statement of the actual or estimated value of the agreement,
including the estimated value of all defense articles to be exported in
furtherance of the agreement or amendments thereto.
* * * * *
PART 126--GENERAL POLICIES AND PROVISIONS
0
7. The authority citation for part 126 continues to read as follows:
Authority: 22 U.S.C. 287c, 2651a, 2752, 2753, 2776, 2778, 2779,
2779a, 2780, 2791, 2797, 10423; sec. 1225, Pub. L. 108-375, 118
Stat. 2091; sec. 7045, Pub. L. 112-74, 125 Stat. 1232; sec. 1250A,
Pub. L 116-92, 133 Stat. 1665; sec. 205, Pub. L. 116-94, 133 Stat.
3052; and E.O. 13637, 78 FR 16129, 3 CFR, 2013 Comp., p. 223.
0
8. Revise Sec. 126.16(m) to read as follows:
Sec. 126.16 Exemption pursuant to the Defense Trade Cooperation
Treaty between the United States and Australia.
* * * * *
(m) Fees and commissions. Exporters authorized pursuant to
paragraph (b)(2) of this section shall, with respect to each export,
transfer, reexport, or retransfer, pursuant to the Defense Trade
Cooperation Treaty between the United States and Australia and this
section, submit to DDTC information in accordance with Sec. 130.9 of
this subchapter relating to political contributions and fees or
commissions.
* * * * *
0
9. Revise Sec. 126.17(m) to read as follows:
Sec. 126.17 Exemption pursuant to the Defense Trade Cooperation
Treaty between the United States and the United Kingdom.
* * * * *
(m) Fees and commissions. Exporters authorized pursuant to
paragraph (b)(2) of this section shall, with respect to each export,
transfer, reexport, or retransfer, pursuant to the Defense Trade
Cooperation Treaty between the United States and the United Kingdom and
this section, submit to DDTC information in accordance with Sec. 130.9
of this subchapter relating to political contributions and fees or
commissions.
* * * * *
PART 130--POLITICAL CONTRIBUTIONS, FEES, AND COMMISSIONS
0
10. The authority citation for part 130 continues to read as follows:
Authority: Sec. 39, Pub. L. 94-329, 90 Stat. 767 (22 U.S.C.
2779); 22 U.S.C. 2651a; E.O. 13637, 78 FR 16129.
0
11. Revise Sec. 130.2 to read as follows:
Sec. 130.2 Applicant.
Applicant means a person who applies to the Directorate of Defense
Trade Controls for an authorization required under this subchapter for
the export, reexport, or retransfer of defense articles or defense
services valued in an amount of $1,000,000 or more which are being sold
commercially to or for the use of the armed forces of a foreign country
or international organization. This term also includes a person who
applied for and was issued the required authorization or who utilized
or plans to utilize an exemption in Sec. 126.16 or Sec. 126.17 of
this subchapter.
0
12. Revise Sec. 130.5 to read as follows:
Sec. 130.5 Political contribution.
Political contribution means a loan, gift, donation or other
payment of $1,000 or more made, or offered or agreed to be made,
directly or indirectly, whether in cash or in kind, which is:
(a) To or for the benefit of, or at the direction of, any foreign
candidate, committee, political party, political faction, or government
or governmental subdivision, or any individual elected, appointed or
otherwise designated as an employee or officer thereof; and
(b) For the solicitation or promotion or otherwise to secure the
conclusion of a sale of defense articles or defense services to or for
the use of the armed forces of a foreign country or international
organization. Taxes, customs duties, license fees, and other charges
required to be paid by applicable law or regulation are not regarded as
political contributions.
[[Page 35934]]
0
13. Revise Sec. 130.6 to read as follows:
Sec. 130.6 Fee or commission.
(a) Fee or commission means, except as provided in paragraph (b) of
this section, a loan, gift, donation or other payment of $1,000 or more
made, or offered or agreed to be made directly or indirectly, whether
in cash or in kind, and whether or not pursuant to a written contract,
which is:
(1) To or at the direction of any person, irrespective of
nationality, whether or not employed by or affiliated with an
applicant, a supplier or a vendor; and
(2) For the solicitation or promotion or otherwise to secure the
conclusion of a sale of defense articles or defense services to or for
the use of the armed forces of a foreign country or international
organization.
(b) The term fee or commission does not include:
(1) A political contribution or a payment excluded by Sec. 130.5
from the definition of political contribution;
(2) A normal salary, excluding contingent compensation, established
at an annual rate and paid to a regular employee of an applicant,
supplier or vendor;
(3) General advertising or promotional expenses not directed to any
particular sale or purchaser; or
(4) Payments made, or offered or agreed to be made, solely for the
purchase by an applicant, supplier or vendor of specific goods or
technical, operational or advisory services, which payments are not
disproportionate in amount with the value of the specific goods or
services actually furnished.
0
14. Revise Sec. 130.7 to read as follows:
Sec. 130.7 Supplier.
Supplier means a person who enters into a contract with the
Department of Defense for the sale of defense articles or defense
services valued in an amount of $1,000,000 or more under Sec. 22 of
the Arms Export Control Act (22 U.S.C. 2762).
0
15. Amend Sec. 130.8 by revising the introductory text to paragraph
(a) and paragraph (a)(1) to read as follows:
Sec. 130.8 Vendor.
(a) Vendor means a distributor or manufacturer who, directly or
indirectly, furnishes to an applicant or supplier defense articles
valued in an amount of $1,000,000 or more which are end-items or major
components as defined in Sec. 120.45 of this subchapter. It also means
any person who, directly or indirectly, furnishes to an applicant or
supplier defense articles or services valued in an amount of $1,000,000
or more when such articles or services are to be delivered (or
incorporated in defense articles or defense services to be delivered)
to or for the use of the armed forces of a foreign country or
international organization under:
(1) A sale requiring authorization from the Directorate of Defense
Trade Controls under this subchapter; or
* * * * *
0
16. Revise Sec. 130.9 to read as follows:
Sec. 130.9 Annual reporting requirement.
(a) Applicant obligation to report. An applicant must submit an
annual report to the Directorate of Defense Trade Controls (DDTC) if
the applicant or its vendors have paid, or offered or agreed to pay, in
respect of any sale:
(1) Political contributions in an aggregate amount of $10,000 or
more; or
(2) Fees or commissions in an aggregate amount of $200,000 or more.
(3) The requirements of paragraph (a) do not apply in the case of a
sale for which all the information specified in Sec. 130.10 has
already been reported to DDTC.
(b) Timing and content of annual applicant report. If the applicant
or its vendors have paid, or offered or agreed to pay, political
contributions or fees or commissions as specified in paragraphs (a)(1)
or (a)(2) of this section, the applicant must furnish the information
specified in Sec. 130.10 in a report to DDTC. The report shall be
submitted at the time of the applicant's registration renewal and
include all qualifying payments, or offers or agreements to pay, since
the date of the applicant's most recent registration or renewal. If all
required information cannot be furnished at the time of submission, the
applicant shall include in its report an explanation as to what
information cannot be furnished and why.
(c) Supplier obligation to report. A supplier must submit an annual
report to DDTC if the supplier or its vendors have paid, or offered or
agreed to pay, in respect of any sale:
(1) Political contributions in an aggregate amount of $10,000 or
more; or
(2) Fees or commissions in an aggregate amount of $200,000 or more.
(d) Timing and content of supplier annual report. If the supplier
or its vendors have paid, or offered or agreed to pay, political
contributions or fees or commissions as specified in paragraphs (c)(1)
or (c)(2) of this section, the supplier must furnish the information
specified in Sec. 130.10 in a report to DDTC. The report shall be
submitted at the time of the supplier's registration renewal or such
earlier date as may be specified by the Department of Defense. If the
supplier is not registered with DDTC, the supplier must submit such
report by the last day of the federal fiscal year, September 30. The
report shall include all qualifying payments, or offers or agreements
to pay, since the date of the supplier's most recent report made
pursuant to this part.
(e) Aggregate computation of political contributions. Any political
contributions which are paid, or offered or agreed to be paid, by or on
behalf of, or at the direction of, any person to whom the applicant,
supplier or vendor has paid, or offered or agreed to pay, a fee or
commission in respect of a sale, must be included in the total
computation of political contributions for that sale under this
section. Any such political contributions are deemed for purposes of
this part to be political contributions by the applicant, supplier or
vendor who paid or offered or agreed to pay the fee or commission.
(f) Reporting for previous periods. Any applicant or supplier
required to furnish information pursuant to paragraphs (a) or (c) of
this section, should include the information relating to all qualifying
payments, or offers or agreements to pay, that occur during the
standard reporting period in the annual submission. In the event of new
information about a previous reporting period, an applicant or supplier
may be required to furnish a supplementary or interim report pursuant
to Sec. 130.11.
(g) Reporting after registration expiration, cessation of
operations, merger, or acquisition. An applicant or supplier required
to furnish information pursuant to paragraphs (a) or (c) of this
section, whose registration expires, who ceases to operate, or who
merges with, acquires, or is acquired by another, must submit such a
report as follows:
(1) An applicant or supplier that ceases to operate, or whose
registration expires, must submit a report to DDTC within 30 days of
the cessation of operations or the registration expiration date,
respectively, that includes all information specified in Sec. 130.10
that has not been furnished in a previous report submitted pursuant to
this part.
(2) The parent, acquiring entity, or new entity formed when a
registrant merges with another company or acquires, or is acquired by,
another company or a subsidiary or division of another company, must
furnish to DDTC for the absorbed or acquired company all of the
information specified in Sec. 130.10 that has not been furnished to
DDTC in a previous report submitted pursuant to this part, no later
than 6 months after the effective date of the merger or acquisition.
After that report, the parent, acquiring entity, or new entity shall
furnish all subsequent
[[Page 35935]]
information with its annual report during registration renewal pursuant
to part 122 of this subchapter.
(h) Form submission. An applicant or supplier must furnish the
information specified in Sec. 130.10 using the reporting form provided
by DDTC and submit the report using the DDTC website.
0
17. Revise and republish Sec. 130.10 to read as follows:
Sec. 130.10 Required information.
(a) Information to be reported to DDTC. Persons required to submit
a report under Sec. 130.9 must furnish to the Directorate of Defense
Trade Controls (DDTC) an annual report signed by a senior officer
(e.g., chief executive officer, president, secretary, partner, member,
treasurer, general counsel) who has been empowered by the applicant or
supplier to sign such documents, including the following information:
(1) The total contract price of the sale to the foreign purchaser;
any relevant Directorate of Defense Trade Controls authorization number
or exemption, or Department of Defense contract or case number; and the
end-item associated with the sale;
(2) The name, nationality, address and principal place of business
of the applicant or supplier and, if applicable, the employer and
title;
(3) The name, nationality, address and principal place of business,
and if applicable, employer and title of each foreign purchaser,
including the ultimate end-user involved in the sale;
(4) Except as provided in paragraph (c) of this section, the
following information must be provided with respect to such sale:
(i) The amount of each political contribution paid, or offered or
agreed to be paid, or the amount of each fee or commission paid, or
offered or agreed to be paid;
(ii) The date or dates on which each reported amount was paid, or
offered or agreed to be paid;
(iii) The recipient of each such amount paid, or intended recipient
if not yet paid;
(iv) The person who paid, or offered or agreed to pay such amount;
and
(v) The aggregate amounts of political contributions and of fees or
commissions, respectively, which shall have been reported.
(b) Specified information relating to certain payments and
recipients. In responding to paragraph (a)(4) of this section, the
report must:
(1) With respect to each payment reported, indicate whether such
payment was in cash or in kind. If in kind, it must include a
description and valuation thereof. Where precise amounts are not
available because a payment has not yet been made, an estimate of the
amount offered or agreed to be paid must be provided;
(2) With respect to each recipient, state:
(i) Its name;
(ii) Its nationality;
(iii) Its address and principal place of business;
(iv) Its employer and title; and
(v) Its relationship, if any, to the applicant, supplier, or
vendor, and to any foreign purchaser or end-user.
(c) Payments that may be labeled as miscellaneous. In submitting a
report required by Sec. 130.9, the detailed information specified in
paragraph (a)(4) and (b) of this section need not be included if the
payments do not exceed:
(1) $5,000 in the case of political contributions; and
(2) $100,000 in the case of fees or commissions.
In lieu of reporting detailed information with respect to such
payments, the aggregate amount thereof must be reported, identified as
miscellaneous political contributions or miscellaneous fees or
commissions, as the case may be.
(d) Required responses. Every person required to furnish the
information specified in paragraphs (a) and (b) of this section must
respond fully to each subdivision of those paragraphs and, where the
correct response is ``none'' or ``not applicable,'' must so state.
(e) Senior officer certification. The senior officer empowered to
sign such documents shall include a certification that the submission
is complete and accurate.
0
18. Revise Sec. 130.11 to read as follows:
Sec. 130.11 Supplementary and interim reports.
(a) Obligation to submit supplementary report. An applicant or
supplier must furnish to the Directorate of Defense Trade Controls
(DDTC) the information specified in Sec. 130.10 in a supplementary
report when the applicant or supplier submitted an annual report
pursuant to Sec. 130.9 for a reporting period and either:
(1) Subsequent developments cause the information initially
reported with respect to that sale to no longer be accurate or complete
(e.g., where an applicant is made aware of a payment or offer to pay
made during a previous reporting period and not included in a prior
annual report, or where a payment actually made is substantially
different in amount from a previously reported estimate of an amount
offered or agreed to be paid, or where certain information specified in
Sec. 130.10 could not be obtained at the time of annual submission);
or
(2) Additional details are requested by DDTC with respect to any
miscellaneous payments reported under Sec. 130.10(c).
(b) Timing and content of supplementary report. A supplementary
report required under paragraph (a)(1) of this section must be
furnished to DDTC within 30 days of discovering that the information
previously reported to DDTC is no longer accurate or complete. A
supplementary report required under paragraph (a)(2) of this section
must be furnished to DDTC within 30 days of such request. All
supplementary reports must include the information specified in Sec.
130.10 required or requested by DDTC and which was not previously
reported.
(c) Obligation to submit interim report. Every applicant or
supplier must furnish to DDTC the information specified in Sec. 130.10
in an interim report if the applicant or supplier did not submit an
annual report pursuant to Sec. 130.9 for a reporting period and later
discovers that the applicant or its vendors or the supplier or its
vendors have paid, or offered or agreed to pay, political contributions
or fees or commissions in an aggregate total specified in Sec. 130.9
during that reporting period.
(d) Timing and content of interim report. An interim report
required under paragraph (c) of this section must be furnished to DDTC
within 30 days after discovering the information that, if known to the
applicant or supplier at the time, would have obliged the applicant or
supplier to submit an annual report pursuant to Sec. 130.9. Any
interim report furnished under paragraph (c) must, in addition to the
information specified in Sec. 130.10, include a detailed statement of
the reasons why applicant or supplier did not furnish the information
at the time specified in Sec. 130.9.
(e) Interaction of supplementary or interim report with annual
reporting requirement. An applicant or supplier who furnishes a
supplementary report or an interim report to DDTC pursuant to
paragraphs (a) or (c) of this section is not released from any
obligation to furnish an annual report to DDTC as specified in Sec.
130.9.
0
19. Revise Sec. 130.12 to read as follows:
Sec. 130.12 Information to be furnished by vendor to applicant or
supplier.
(a) Initial vendor statement. In order to determine whether it is
obliged under Sec. 130.9 to furnish the information specified in Sec.
130.10 with respect to a sale, the applicant or supplier must obtain
from each vendor, from or
[[Page 35936]]
through whom the applicant or supplier acquired defense articles or
defense services forming the whole or a part of the sale, a statement
containing a full disclosure by the vendor of all political
contributions or fees or commissions paid, by the vendor with respect
to such sale. Such disclosure must include all the information relating
to the vendor that enables the applicant or supplier to comply fully
with Sec. Sec. 130.9 and 130.10. If so required, the applicant or
supplier must include the information furnished by each vendor in the
report to DDTC made pursuant to Sec. 130.9.
(b) Time limit for an initial statement. Any vendor which has been
requested by an applicant or supplier to provide an initial statement
under paragraph (a) of this section must, except as provided in
paragraph (c) of this section, provide such statement in a timely
manner and not later than 20 days after receipt of such request.
(c) Abbreviated vendor statement. If the vendor believes that
furnishing information to an applicant or supplier in a requested
statement would unreasonably risk injury to the vendor's commercial
interests, the vendor may instead provide an abbreviated statement
disclosing only the aggregate amount of all political contributions and
the aggregate amount of all fees or commissions which have been paid,
or offered or agreed to be paid, or offered or agreed to be paid, by
the vendor with respect to the sale. Any abbreviated statement provided
to an applicant or supplier under this paragraph must be accompanied by
a certification that the requested information will be reported by the
vendor directly to DDTC at the time of the vendor's registration
renewal or, if the vendor is not registered with DDTC, by the last day
of the federal fiscal year, September 30. The vendor must report to
DDTC all information the vendor would otherwise have been required to
report to the applicant or supplier under this section. Any report must
clearly identify the sale with respect to which the reported
information pertains.
(d) Vendor failure to provide initial statement. If upon the 25th
day after the date of its request to any vendor, an applicant or
supplier has not received from the vendor the initial statement
required by paragraph (a) of this section, the applicant or supplier
must submit to DDTC a signed statement attesting to:
(1) The manner and extent of the applicant's or supplier's attempt
to obtain from the vendor the initial statement required under
paragraph (a) of this section;
(2) Vendor's failure to comply with this section; and
(3) The amount of time elapsed between the date of the applicant's
or supplier's request to the vendor and the date of the signed
statement;
(e) Applicant or supplier obligation if vendor fails to provide
statement. The failure of a vendor to comply with this section does not
relieve any applicant or supplier otherwise required by Sec. 130.9 to
submit a report to DDTC from the obligation to submit such a report.
Thomas G. DiNanno,
Under Secretary, Arms Control and International Security, Department of
State.
[FR Doc. 2026-12019 Filed 6-12-26; 8:45 am]
BILLING CODE 4710-25-P
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