DDTC Announces New Registration Fee Structure

The Department of State's Directorate of Defense Trade Controls (DDTC) has increased the fees it charges for registration required pursuant to the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). This is the first increase in registration fees since 2004. The AECA requires registration with DDTC for persons and entities involved in the manufacture, export and brokering activities related to defense articles or defense services. The State Department Basic Authorities Act authorizes the Department to retain registration fees paid to support certain elements of the export control function.

The increase in fees is a result of a National Security Presidential Directive that mandates a series of reforms to improve the timeliness, transparency and predictability of the Department's licensing work. These actions will require DDTC to fully resource its compliance functions and streamline its licensing processes, to include adding personnel and robust IT systems to adjudicate efficiently a growing number of license applications.

The Directive also mandated that DDTC submit a plan to implement a fee structure so that up to 75 percent of DDTC's mission will be self-financed. Although great improvements have already been made under the President's Directive - such as a reduction in the average processing time from 40 to 16 days - the broad range of reforms in the Directive require additional financial resources that will be provided by the fee increase.

The new fee structure is comprised of a three-tier schedule based on the workload generated per registrant:

• Tier 1: A set fee of $2,250 per year. This applies to new and renewing registrants that have not submitted any license applications to DDTC in the preceding 12 months. Non-profit registrants who are exempt from income taxation pursuant to 26 U.S.C. § 501(c)(3), including universities, will only be assessed this fee regardless of the number of applications submitted.
• Tier 2: A set fee of $2,750 for renewing registrants that have submitted between one and ten license applications to DDTC in the preceding 12 months.
• Tier 3: A fee based on $2,750 plus fee $250 per license application greater than ten. To ensure fairness in this tier, there is a provision for a reduction if the fee calculated is greater than 3 percent of the total value of all license applications. In such cases, the fee will be 3 percent of the total value of all requests or $2,750, whichever is greater.

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