SPAIN: DISAGREEMENT ON DSP-83 SIGNING AUTHORITY

UNCLAS MADRID 000296 SIPDIS SIPDIS STATE FOR PM/DDTC - ANN GANZER OSD FOR AT&L/INT'L COOPERATION - SETH WILSON E.O. 12958: N/A TAGS: MASS ETTC PREL SP SUBJECT: SPAIN: DISAGREEMENT ON DSP-83 SIGNING AUTHORITY ¶1. SUMMARY: MOD is concerned because Spain's $1.2 billion program to sell frigates to the Norwegian navy is being delayed by an inability to reconcile US and Spanish technical legal requirements regarding signature of end-user nontransfer documents. Post requests DDTC guidance on how to move forward. See action request paragraph six. END SUMMARY. ¶2. Lockheed Martin and the Spanish shipbuilder Navantia have a $1.2 billion program to build frigates for the Norwegian navy. This program, based on Spain's advanced new F-100 class frigate and including US combat systems technology, has been brought to a temporary halt by DDTC's inability to process a DSP-83 (Nontransfer and Use Certificate) because an authorized representative of the Government of Spain (G0S) has not signed in block 8. ¶3. In this case, the signed DSP-83 is a pre-requisite for an amendment (TA 1437-98H) to the existing Technical Assistance Agreement between Lockheed Martin and Navantia. This amendment is required as a result of a corporate name change. This issue has surfaced because in the case of TA 1437-98H, the end user of the technical data to be transferred is a non-government entity and the signature of Spanish Government representative in block 8 is required by the ITAR. MOD says that the person (MOD's National Industrial Security Authority) who signed the DSP-83 for the original TAA was not authorized to sign such a form. ¶4. In lieu of signing block 8 of the DSP-83, MOD issued its own End Use Certificate, signed by MOD's Director General of Armament and Material (DGAM),in accordance with pertinent Spanish legislation - Royal Decree 1782/2004. MOD asserts that the DGAM is the only GOS representative authorized to sign an End Use Certificate on behalf of the GOS and that he is legally restricted to using only the designated GOS End Use Certificate that is included as an Annex to the Royal Decree. MOD says that the DGAM would exceed his legal authority by signing any form (e.g., a DSP-83) other than the one included in the Royal Decree (NOTE: Post has e-mailed a translation of the Royal Decree to DDTC.). ¶5. MOD contends that the language of its End Use Certificate satisfies the protections required by the ITAR. Until now, MOD has submitted its own End Use Certificate in lieu of signing block 8 of the DSP-83 because in past cases, the end user of the material/data to be transferred was a government entity. Therefore, the signature of the end-user in block 7 was sufficient and the fact that the Spanish Government attached its own End Use Certificate Spanish was irrelevant to the USG. The GOS, however, understood that its End Use Certificate was being accepted in lieu of signing block 8. MOD is aware of the option offered by the ITAR to use an exchange of dip notes in place of signing a DSP-83. MOD, however, notes that the GOS's end user certificate is legally binding, thus offering greater legal assurance than a dip note. ¶6. ACTION REQUEST: The broader issues raised by this case could be addressed by the Export Controls Working Group of Declaration of Principles when the group meets in May 2007. However, a near-term solution is needed to avoid Lockheed Martin and Navantia incurring serious contract penalties as a result of the work stoppage and to avoid disrupting the Royal Norwegian Navy's associated training programs. Post is aware that DDTC has developed various work-arounds with other European allies that have similar restrictions against signing a DSP-83. Post requests DDTC guidance as to how to resolve this impasse with Spain. LLORENS