DOD Proposal Letter

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COMMENTS ON PROPOSED DEPARTMENT OF DEFENSE RULE
REGARDING EXPORT-CONTROLLED INFORMATION AND TECHNOLOGY
AT CONTRACTOR, UNIVERSITY, AND FEDERALLY FUNDED RESEARCH
AND DEVELOPMENT CENTER FACILITIES


[DFARS Case 2004-D010]


U.S. Public Policy Committee of the Association for Computing Machinery (USACM)


12 October 2005


INTRODUCTION


We write as members of the U.S. Public Policy Committee of the Association for
Computing Machinery (http://www.acm.org/usacm), which is widely recognized as the
leading organization for computing professionals, delivering resources that advance
computing as a science and a profession, enabling professional development, and
promoting policies and research that benefit society. USACM members include leading
computer scientists, engineers, and other professionals from industry, academia, and
government. We wish to join with others in the computing research community to
register our concerns with the proposed rule changes.


The Department of Defense’s proposed changes1 to the Defense Federal Acquisition
Regulation Supplement (DFARS) would mandate that department contracts contain a
new clause requiring a contractor to:


1) Comply with all applicable laws and regulations regarding exportcontrolled
information and technology;
2) Maintain an effective export compliance program;
3) Conduct initial and periodic training on export compliance controls; and
4) Perform periodic assessments (to ensure compliance)


Further, the department’s proposal contains details on what “maintaining an effective
export compliance program” would entail. To comply contractors would have to:


1) Create and maintain unique badges for foreign nationals and foreign
persons employed by the entity;
2) Build segregated work areas for these persons; and,
3) Prevent these individuals from gaining any access to export-controlled
technology without first obtaining a specific license, authorization or
exemption, even if these individuals may be working under the longstanding
fundamental research exemption.


This change responds to an Inspector General’s report that claims current policies are not
adequate to prevent foreign nationals from gaining access to sensitive, but otherwise
unclassified, technology.


The Department claims that its amendment is only a clarification of current policy to
address the Inspector General’s concerns; however, the current proposal is not consistent
with that claim. The first requirement of the new contract clause is that contractors
comply with all applicable laws. Considering that contractors are already bound to follow
existing law it is not clear why this needs to be restated. The proposal then outlines
entirely new burdens (i.e., unique badging and segregated work spaces) on contracting
universities and companies that may have foreign nationals working in their facilities.
This goes beyond clarification to place a costly new burden on institutions employing
foreign nationals.


When conducting research under Department of Defense contracts many institutions seek
an open and collaborative atmosphere. This is one of the key reasons why the federal
government created the long-standing “fundamental research” exemption for export
controls. This exemption recognizes that there is little need to restrict access to research
that will be widely distributed or published. The Department’s proposal seemingly does
not recognize this exemption.


Further, the Department’s proposal does not take into account the potential impact of
another related, restrictive proposal2 by the Department of Commerce, which would
expand the definition of export-controlled technologies and place even more burden on
research facilities.


Lastly, this proposal sends a signal to foreign researchers they are no longer welcome in
U.S. university and industrial research facilities. Our research enterprise has always
attracted the best and brightest from around the world. This has helped the U.S. become a
world leader in science and technology, in fundamental research, and in education. Many
other countries, seeking to attract and bolster their own high-technology industries in
competition with the United States, are actively recruiting and welcoming these same
researchers. Policies that exacerbate an already hostile atmosphere3 for foreign nationals
coming to the United States hamper our ability to attract these researchers and, in turn,
damages U.S. high-technology research.


COSTLY NEW BURDENS ON RESEARCH


The proposed rule change would result in additional costly and unwarranted burdens on
academia and industry with respect to DOD-funded technological research and
development. For example, segregating work environments for foreign researchers,
mandatory badge requirements for researchers, adding new security measures/personnel,
creating new physical access systems and procedures, and the added administrative
processes needed to manage these new elements would prove costly to institutions
already making do with decreasing research budgets and resources. Indeed, the increased
costs for researchers and their organizations could even be prohibitive, going so far as
stopping worthwhile research and development from ever getting started. Investing in
these new procedures seems particularly onerous considering that the foreign researchers
in question will likely already have gone through a detailed screening program through
the “Visa Mantis” program, which is itself having a negative effect on U.S. research and
education.4


USACM is also deeply concerned that the proposed rule change makes no mention of an
exemption for fundamental research. As you know, National Security Decision Directive
189 (NSDD-189)5 states that:


… to the maximum extent possible, the products of fundamental research remain
unrestricted. It is also the policy of this Administration that, where the national
security requires control, the mechanism for control of information generated
during federally-funded fundamental research in science, technology and
engineering at colleges, universities and laboratories is classification.


During a recent workshop6 at the National Academies, DOD’s Defense Procurement and
Acquisition Policy Office stated7 that its proposal would not impact contracts where there
was no access to export-controlled technology, including contracts that only required
“fundamental research.” However, the proposed rule does not explicitly mention the
fundamental research exemption. If the Department intends that this exemption be
continued, it would be prudent to reference NSDD-189 in the new contract clause. Such
a reference will ensure that contracting officers and institutions have a clear
understanding as to whether or not the work to be done could be exempted.


CUMULATIVE IMPACT OF PROPOSAL NOT TAKEN INTO ACCOUNT


To define its scope of proposed rule-making, the Department’s proposal references the
underlying Export Administration Regulations8 (EAR) and International Traffic in Arms
Regulations9 (ITAR). However, the proposed rule does not mention the Bureau of
Industry and Security’s (BIS) recent advanced notice of proposed rulemaking to redefine
the “use” of technology.


In responding to a similar report by the Department of Commerce’s Inspector General,
BIS proposed restrictions on so-called “deemed exports,” which are defined as when
controlled equipment or technology (such as manuals, software, etc.) is released to or
used by a foreign national within the United States. USACM has already commented10
that this proposal would further confuse what technology falls under deemed export
controls. While BIS’s proposal would make a seemingly minor technical change to the
current definition of what it means to “use” equipment and technology, the discussion of
this change would complicate already opaque rules by confusing the use of controlled
technology with “use” technology (i.e. manuals) that may be publicly available (and
therefore not subject to existing rules). For example, a manual or software to operate
controlled equipment might be publicly available, meaning there would be no
government restrictions on a foreign national’s access. BIS’s proposal implies that all
technology involved in the use of equipment could be subject to deemed export rules.
This is contrary to long-standing exemption guidelines, which state that publicly
available technology includes the following:


• information that is or will be published;
• information that arises during, or results from, fundamental research; and
• educational information.


USACM concluded that the BIS proposal puts the fundamental research exemption in
jeopardy and drastically expands the amount of technology subject to deemed export
rules. As the Department of Defense’s proposal makes clear, the existing EAR cannot be
viewed as separate from the department’s policy. Therefore, should BIS’s proposed rule
be adopted and its definition of controlled technology adopted by reference in
Department of Defense contracts, the amount of technology subject to control could
substantially increase to include technology that is non-proprietary or that is used in
fundamental research. The cumulative impact of these two proposals could dramatically
expand the burden on universities and companies that struggle to determine what exactly
is subject to export controls and to comply with the regulations. The end result could be
incredibly negative for the U.S. research community.


As BIS’s proposal is in the initial stages of the regulatory process, it is understandable
that the Department of Defense would have difficulty accounting for a potentially
“moving target.” However, considering how deeply connected the two proposals are,
USACM strongly recommends that the Department withhold any action on its proposal
until it is clear how the BIS intends to proceed.


RESTRICTIONS ON THE WORK OF FOREIGN RESEARCHERS IS
DISCRIMINATORY, COUNTERPRODUCTIVE, AND THREATENS
INNOVATION


Successful research depends on getting the best people to work on the most difficult
problems. Increased restrictions on foreign researchers – researchers who play an
absolutely critical and indispensable role in U.S. IT research – puts our open research
enterprise at risk by limiting the free flow of information among researchers. USACM’s
conclusion is that the proposed rule is discriminatory, for it would result in treating
foreign researchers differently from others simply because of who they are, in the
absence of specific concerns. Presumably, this would be after those foreign researchers
have successfully navigated the U.S. visa process.


The new rule would also exacerbate an already hostile atmosphere for talented foreign
nationals who may be considering coming to the United States to participate in our R&D.
Much of our innovation is fueled by the brightest students in the world wanting to come
to the U.S. to study and perform research. Once here, many of those same students and
visitors decide to join the workforce and stay, often becoming U.S. citizens. The U.S. has
benefited greatly by attracting the brightest people out of hundreds of millions in
countries around the world. However, recent heightened fears over foreign nationals in
the U.S. have led to actions, such as more restrictive visa rules and this proposed rule,
that mean that those visitors are unable or unduly encumbered if they wish to come to this
country to study and cooperate in research. Further, they often are not allowed to stay
after finishing their degrees and thus contribute to U.S. innovation and creativity. The
Department’s proposed rule would create an even more hostile atmosphere by
segregating foreign researchers, treating them differently, and sending a message to
foreign researchers that they may not be allowed to access the most state-of-the-art
technologies for their open, unclassified work.


Not only would the proposed rule short-change our research environment and (by
extension) our economy, but it means that bright young scientists and engineers will
either stay in their present countries or go to countries where they are able to work
unencumbered (i.e., with our competition). At a time when America's technological
leadership is being challenged as never before by competition from overseas and
outsourcing of once-U.S.-based operations, we truly cannot afford to do anything that
might undermine the United States' technology leadership edge – an area that has been
and is central to U.S. economic vitality now and in the future.


CONCLUSION


The U.S.’s economic strength lies in the innovation that is driven by a robust and open
research base. This research enterprise depends upon the free flow of information to
stimulate new ideas and new directions for the development of new technologies.
However, overall U.S. export control policy at this time is a particularly confusing area of
government regulation and one that poses a distinct threat to U.S. innovation and the
general health of the U.S. IT research and education enterprise. DOD’s current proposed
rule change – at a time when the Department of Commerce is also working on similar
export policy changes – does little to ease this confusion. USACM strongly
recommends:


1) The Department specifically include the long-standing fundamental
research exemptions in its changes so the scope of the new DFARS
regulation is clearer to contracting officers and institutions.
2) The current proposal be delayed at least until it is clear how the BIS
intends to proceed with its restrictions on deemed exports. Further, should
BIS’s proposal move forward in any form, that the Department reassess
how its proposal would interact with new EAR regulations and seek
additional public comment on any new proposal.
3) The Department’s policy office carefully and thoroughly assess how these
new burdens would impact foreign researchers contributing the U.S.
innovation enterprise and what impacts it might have on U.S.’s technology
leadership in the global economy.


ABOUT USACM


USACM is the U.S. Public Policy Committee of the Association for Computing
Machinery, which is widely recognized as the premier organization for computing
professionals, delivering resources that advance the computing as a science and a
profession, enabling professional development, and promoting policies and research that
benefit society. ACM is the world’s first educational and scientific computing society
with more than 80,000 members worldwide. USACM members include leading computer
scientists, engineers, and other professionals from industry, academia, and government.
Please contact the ACM Office of Public Policy Office at (202) 659-9711 if you have any
questions about this. For more information about USACM and ACM, see
<http://www.acm.org/usacm/about.html>.




______________

1 As described at <http://www.acq.osd.mil/dpap/dars/dfars/changenotice/2005/20050712/2004d010.htm>.                                                                                                                                                                      2 See <See <http://frwebgate1.access.gpo.gov/cgibin/
waisgate.cgi?WAISdocID=991531282419+3+0+0&WAISaction=retrieve>.                                                             3 Restrictive visa requirements instituted in the wake of the attacks of September 11, 2001, increased classification of research, and new restrictive identification policies such as the recently    enacted “Real ID Act” (P.L. 109-13) all contribute to a hostile atmosphere
for foreign nationals coming and staying in the United States.                                                                                     4 See GAO report 04-371, “Border Security.”
5 See <http://www.fas.org/irp/offdocs/nsdd/nsdd-189.htm>.
6 "A Workshop on Export Controls: Amending DFARS," sponsored by the National
Academies, September 16, 2005, Washington, D.C. For more information, see
<http://www7.nationalacademies.org/rscans/>.
7 Page five of Ms. Barbara Glotfelty and Ms. Debra Overstreet’s September 16, 2005,
presentation.                                                                                                                                                                                    8 15 CFR parts 730-744
9 22 CFR parts 120-130
10 To view USACM’s comments on BIS’s proposed rule see
<http://www.acm.org/usacm/PDF/deemed_export_comments.pdf>.

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