James Y. Rayis, Of Counsel

Revisions to U.S. Export Control Rules

Beginning in July of 2013 the Commerce and State Departments, as well as the Bureau of Industry and Security (“BIS”), began publishing proposed revisions to the export control laws on products and technology.  In October final rules were implemented by executive order and administrative regulations. Further revisions and reclassification of products were made in January 2014. These changes are intended to simplify the classification and review process for determining licenses required and outright bans on specific products exported to specific nations.

There are three primary areas of reform under the President’s Export Control Reform Initiative. The first is the gradual consolidation of separate lists under multiple enforcement regimes into a single list of controlled items, beginning with shifting many products previously listed on the U.S. Munitions List (“USML”), regulated under the International Traffic in Arms Regulations (“ITAR”), to the Commodity Control List (“CCL”). A second area of reform is the redefinition of specially designed items, a reform which has major significance to the automotive industry. The third area is a simplification of the export licensing and approval process.

The consolidation to a single list of controlled items is intended to ease the licensing burdens on many items and will eliminate the prior prohibitions on the export of certain items. These specified products will still be subject to controls but the system for approval and licensing is revised to attempt a more predictable and less burdensome process than under ITAR. Items shifted from the USML list to the CCL list include certain aircraft, ground vehicles used for military purposes, turbine engines and test equipment and components.

Item descriptions were clarified to remove some of the inherently vague descriptions under the prior lists, allowing  more definite identification. Products may now be identified with specific criteria such as speed, weight, dimensions, accuracy and other more objective measurements. Automotive components, for example are more easily categorized. A single consolidated screening list is available at the export.gov website.

Specifically exempted from ITAR restrictions on “specially designed” products are those allowed prior export, nuts, bolts and screws, and certain items developed for commercial (not military) use. Many automotive components, parts and systems built for commercial vehicles are subject to less restrictions and many may be exported without a license.

Companies that export products or technology should conduct a review to determine how the new rules and regulations apply to them.  Certain items may be grandfathered under existing licenses, but to the extent the new rules apply, companies will need to invest time and effort to be ready when their existing licenses expire.

For assistance with import and export or other government regulatory matters, please contact James Y. Rayis at (248) 457-7173; jrayis@gmhlaw.com

Federal Budget Cutbacks Deeply Affecting Government Contractors

Lawmakers last week grilled TSA’s Deputy Administrator John Halinski over decisions recently made – including a $50 million contract for new uniforms — around the same time TSA claimed that it faced severe cuts from the government sequester.

Fourteen of the U.S. government’s 20 largest pending contract awards have been delayed as a result of across the board federal spending cuts. The total value of those contracts has fallen nearly 40 percent from the 2012 fiscal year.

The Washington, D.C. market research firm Deltek reported the drop in value is a result of federal agencies’ efforts to avoid duplicative contracts as their budget allocations are reduced. Their report shows the Army delaying six contracts worth up to $22 billion combined.

Deltek writes that the Army alone scaled back an $8 billion war fighter training contract award from June 2013 to March 2014 and another potential $4.9 billion space and missile technology contract from April to August.

The Air Force owns the largest contract on Deltek’s survey, a potential $10-year, $20.9 billion award for training systems.  Deltek expects the Air Force to issue an award in June 2014, one year later than it previously expected.

Government Accountability Office figures show 2012 fiscal year with the most bid protests (contractor objections) filed since 2008. There was a 5-percent increase in overall cases from 2011 to 2012. The number of sustained (winning) protests also rose from 67 cases in 2011 to 106.

Among the possible results of the budget cuts on contract awards are government cancellations or terminations, scale-back changes, options not being exercised and work going back to government agencies instead of being procured out. This would lead to many possible outcomes of losses to contractors that have remedies in federal procurement law under the federal acquisition regulations (FAR) and defense regulations (DFAR). Considering the way that government agencies are drawing attention to the cutbacks through public outcry, expect more government action to negatively affect many federal government contractors.

James Y. Rayis is part of the Business Practice Group of Giarmarco, Mullins and Horton, P.C., with special expertise in governmental contracting and international business transactions.  For more information, you may contact him directly at (248) 457-7173 or jrayis@gmhlaw.com.

Giarmarco, Mullins & Horton is pleased welcome James Y. Rayis

Giarmarco, Mullins & Horton, P.C. is pleased to welcome James Y. Rayis

Practice Areas: Corporate/business law, international corporate transactions, Human Rights law and development program, government contracts/procurement law, Director-Baghdad, Global Justice Project Iraq.

Current: Principal, James Y. Rayis, P.C. International Law History:

Director-Chief of Party: Global Justice Project Iraq 2008-2009 Iraq program on legislative and regulatory consultation to improve and strengthen judicial and legal practice independence of Iraqi law and structures, including Supreme Court, lower courts and bar practice reforms,

Law Partner: Dickinson Wright, PLLC, Washington D.C., Atlanta Balch & Bingham, LLP Washington, D.C., Atlanta Associate: Powell, Goldstein (currently Bryan Cave), Atlanta

V. P. & General Counsel: Omnivest International, Inc. Denver, Colorado Organized, guided and directed legal function for globally operating venture capital and financial investment firm based in Taipei, Taiwan.

Admitted to Practice: Washington, D.C., Georgia, Michigan, Colorado

Education: University of Georgia, J.D., Dean Rusk International Research Scholar, Managing Board, Georgia Journal of International and Comparative Law. Michigan State University, B.A., Economics/French minor, Phi Gamma Delta Memorial Scholarship; Michigan Competitive Scholar.