MEMORANDUM OF UNDERSTANDING

BETWEEN

THE DEPARTMENT OF DEFENSE

OF THE UNITED STATES OF AMERICA

AND

THE SECRETARY OF STATE FOR DEFENCE OF

THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND

CONCERNING

COOPERATIVE OUTBOARD LOGISTICS UPDATE (COBLU) IN-SERVICEAND LIFE CYCLE SUPPORT (ILCS)

(Short Title - COBLU ILCS MOU)

Certifi-e-id to be a true copy:

-t

Patricia DollInternational Agreements NegotiatorNavy International Programs Office

TABLE OF CONTENTS

INTRODUCTION 4

SECTION I

DEFINITIONS 5

SECTION TT

OBJECTIVES 10

SECTION TIT

SCOPE OF WORK 11

SECTION IV

MANAGEMENT (ORGANIZATION AND RESPONSIBILITY) 13

SECTION V

FINANCIAL PROVISIONS 18

SECTION VI

CONTRACTING PROVISIONS 21

SECTION VII

PROJECT EQUIPMENT 24

SECTION VIII

DISCLOSURE AND USE OF PROJECT INFORMATION 26

SECTION IX

CONTROLLED UNCLASSIFIED INFORMATION 35

SECTION X

VISITS TO ESTABLISHMENTS 37

SECTION XI

SECURITY 38

SECTION XTI

THIRD PARTY SALES AND TRANSFERS 41

SECTION XIII

LIABILITY AND CLAIMS 43

SECTION XIV

PARTICIPATION OF ADDITIONAL NATIONS 44

SECTION XV

CUSTOMS DUTIES, TAXES, AND SIMILAR CHARGES 45

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SECTION XVI

SETTLRMFNT OF DISPUTES 46

SECTION XVI I

AMENDMENT, TERMINATION, ENTRY INTO EFFECT,AND DURATION 47

ANNEX A

COOPERATIVE PROJECT PERSONNEL 50

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INTRODUCTION

The Department of Defense of the United States of America (U.S.DoD) and the Secretary of State for Defence of the UnitedKingdom of Great Britain and Northern Ireland (U.K. MOD),hereinafter referred to as the "Participants":

Recognizing the Agreement Concerning Defense CooperationArrangements of May 27, 1993 between the Government of theUnited States of America and the Government of the UnitedKingdom of Great Britain and Northern Ireland, as amended by theExchange of Notes between the Government of the United States ofAmerica and the Government of the United Kingdom of GreatBritain and Northern Ireland of June 1, 2007, applies to thisMOU;

Having a common interest in defense;

Recognizing the benefits to be obtained from standardization,rationalization, and interoperability of military equipment;

Desiring to improve their mutual conventional defensecapabilities through the application of emerging technology;

Recognizing the Participants' cooperation under the Memorandumof Understanding (MOU) between the Secretary of Defense onbehalf of the Department of Defense of the United States ofAmerica and the Secretary of State for Defence of the UnitedKingdom of Great Britain and Northern Ireland concerning theCooperative Outboard Logistics Update (COBLU) (AN/SSQ-108-V())Project of July 1, 1994, as amended (hereinafter referred to asthe "COBLU Project MOU");

Having a mutual need for in-service and life cycle systemsupport of the COBLU System to satisfy common operationalrequirements; and

Recognizing the benefits of further cooperation regarding theCOBLU System and seeking to capitalize on the lessons learnedfrom their previous experience under the COBLU Project MOU;

Have reached the following understandings:

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SECTION I

DEFINITIONS

The Participants have jointly decided upon the followingdefinitions of terms used in this MOU:

BaselineImprovements

Modifications to the COBLU System baselineto mitigate obsolescence due to the rapidadvance of commercial-off-the-shelf hardwareand other non-developmental items andmaintain interoperability.

Classified Official Information that requiresInformation protection in the interests of national

security and is so designated by theapplication of a security classificationmarking. This Information may be in oral,visual, magnetic, or documentary form or inthe form of equipment or technology.

COBLU System

Contract

Contracting

A threat signal analysis system that was thesubject of cooperative engineering andmanufacturing development, production, andupgrades under the COBLU Project MOU. Thissystem provides the Participants' surfaceships with a real-time passive cryptologiccapacity to detect, locate, and trackhostile units at over-the-horizon ranges byexploiting their communication signals.

Any mutually binding legal relationshipunder national laws that obligates aContractor to furnish supplies or services,and obligates one or both of theParticipants to pay for them.

The obtaining of supplies or services byContract from sources outside thegovernmental organizations of theParticipants. Contracting includesdescription (but not determination) ofsupplies and services required, solicitationand selection of sources, preparation andaward of Contracts, and all phases ofContract administration.

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Contracting Agency The entity within the governmentalorganization of a Participant that hasauthority to enter into, administer, orterminate Contracts.

Contracting Officer A person representing a Contracting Agencyof a Participant who has the authority toenter into, administer, or terminateContracts.

Contractor Any entity awarded a Contract by aParticipant's Contracting Agency.

Contractor SupportPersonnel

ControlledUnclassifiedInformation

Persons specifically identified as providingadministrative, managerial, scientific, ortechnical support services to a Participantunder a support Contract.

Unclassified Information to which access ordistribution limitations have been appliedin accordance with applicable national lawsor regulations. It could includeInformation that has been declassified butremains controlled.

Cooperative Project Military members or civilian employees of aPersonnel (CPP) Parent Participant assigned to the Joint

Program Office (JPO) who perform managerial,engineering, technical, administrative,Contracting, logistics, financial, planning,or other functions in furtherance of theProject.

Defense Purposes Manufacture or other use in any part of theworld by or for the armed forces of eitherParticipant.

Designated Security The security authority designated byAuthority (DSA) national authorities to be responsible for

the coordination and implementation ofnational industrial security aspects of thisProject.

Financial Costs Project costs met with monetarycontributions.

6

Financial Cost The maximum amount of shared Financial Costs

Ceiling that may be dedicated to the Project without

the prior written approval of theParticipants..

Host Participant The Participant whose nation serves , as thelocation of the JPO.

Information

IntellectualProperty

Knowledge that can be communicated by anymeans, regardless of form or type,including , but not limited to, that of ascientific, technical, business, orfinancial nature, and also includingphotographs, reports, manuals, threat data,experimental data, test data, computersoftware, designs, specifications,processes, techniques, inventions, drawings,technical writings, sound recordings,pictorial representations, and othergraphical presentations, whether in magnetictape, computer memory, or any other form andwhether or not subject to IntellectualProperty rights.

In accordance with the World TradeOrganization Agreement on Trade-relatedAspects of Intellectual Property Rights ofApril 15,1994, all copyright and relatedrights, all rights in relation to inventions(including Patent rights), all rights inregistered and unregistered trademarks(including service marks), registered andunregistered designs, undisclosedInformation (including trade secrets andknow-how), layout designs of integratedcircuits, and geographical indications, andany other rights resulting from creativeactivity in the industrial, scientific,literary, and artistic fields.

Joint Project The office established to manage theOffice (JPO) Project.

Non-financial Costs Project costs met with non-monetarycontributions.

Parent Participant

Participant

Patent

Project

The Participant that sends its CPP to theJPO located in the nation of the otherParticipant.

A signatory to this MOU represented by itsmilitary or civilian personnel. Contractorsand Contractor Support Personnel will not berepresentatives of a Participant under thisMOU.

Grant by any government or a regional officeacting for more than one government of theright to exclude others from making, using,importing, selling, or offering to sell aninvention. The term refers to any and allpatents including, but not limited to,patents of implementation, improvement, oraddition, petty patents, utility models,appearance design patents, registereddesigns, and inventor certificates or likestatutory protection, as well as divisions,reissues, continuations, renewals, andextensions of any of these.

The cooperative efforts of the Participantsunder this MOU to achieve the objectives inSection II (Objectives) and accomplish thework in Section III (Scope of Work).

Information not generated in the performanceof the Project.

Project management direction (contained in aProject Plan) developed and approved inaccordance with Section IV (Management(Organization and Responsibility)) of thisMOU, which is implemented through the awardor modification of Contracts. The ProjectDirection for Contracts (PDC) containsprovisions that address the Participants'interests regarding technical requirements,Project objectives, and Contractingstrategies. These PDC provisions providethe Information necessary for theContracting Agency to conduct procurementsand negotiate and award Contracts andContract modifications that achieve Project

Project BackgroundInformation

Project Directionfor Contracts (PDC)

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Project Equipment

objectives.

Any material, equipment, end item,subsystem, component, special tooling, ortest equipment jointly acquired or providedfor use in the Project.

Project Foreground Information generated in the performance ofInformation the Project.

Project Information Any Information provided to, generated in,or used in the Project.

Project Invention Any invention in any field of technology,provided it is new, involves an inventivestep, is capable of industrial application,and is formulated or made (conceived or"first actually reduced to practice") in thecourse of work performed under a Project.The term "first actually reduced topractice" means the first demonstration,sufficient to establish to one skilled inthe art to which the invention pertains, cfthe operability of an invention for itsintended purpose and in its intendedenvironment.

Project Plan A plan developed by the Project Manager that

provides a description of the Project'sdelivery requirements and milestones.

Prospective Any entity that seeks to enter into aContractor Contract to be awarded by a Participant's

Contracting Agency and that, in the case ofa solicitation involving the release ofexport-controlled Information, is eligibleto receive such Information.

Third Party A government other than the Government of aParticipant and any person or other entitywhose government is not the Government of aParticipant.

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SECTION II

OBJECTIVES

2.1. The objectives of the Project are:

2.1.1. To provide in-service and life cycle support tosustain the COBLU System on the Participants'surface ships through the remaining service lifeof the COBLU System.

2.1.2. To mitigate obsolescence through BaselineImprovements to the Participants' COBLU Systems.

1 0

SECTION III

SCOPE OF WORK

3.1. The overall work to be carried out under this MOU includesthe following efforts to achieve the objectives set out inparag raph 2.1. of Section II (Objectives) of this MOU:

3.1.1.

3.1.2.

3.1.3.

3.1.4.

3.1.5.

3.1.6.

3.1.7.

Identification, isolation, and resolution ofproblems or errors associated with the COBLUSystem software. These efforts will also includechanges to COBLU System software required tomaintain a current up-to-date baseline.

Analysis and correction of common design-relatedhardware problems for COBLU Systems and supportequipment.

Identification of changes to support and testequipment necessitated by the BaselineImprovements for the COBLU System and planningfor the implementation of those changes.

Revision of training documentation, relatedsoftware, and training support equipment, asnecessitated by changes to the COBLU Systembaseline.

Management and planning for changes to theconfiguration of the COBLU System baseline thatoccur due to Baseline Improvements.

Revision to the methods for packaging, handling,storage, and transportation of COBLU Systems andsupport equipment, as necessitated by changes tothe COBLU System baseline.

Life cycle system obsolescence analysis insupport of all in-service U.S. and U.K. COBLUSystems, including identification of requirementsfor improving the COBLU System baseline tomitigate obsolescence and maintaininteroperability and the creation of solutionsfor Baseline Improvements. Upon completion ofsolutions for Baseline Improvements, existingCOBLU Systems will be retrofitted as determinedby the Steering Committee (SC). This effort

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3.1.8.

includes identification and update of systemmaintenance systems or processes.

Provision of items and services intended for theindividual Participants' in-service and lifecycle support requirements for their nationalCOBLU Systems. This effort includes, but is notlimited to, the following:

3.1.8.1. Software technical support, includinghelp desk support for unique surfaceship or site-specific installation andtesting of COBLU System software.

3.1.8.2. COBLU System hardware maintenance andrepair support, including replacementof spares, repair of repairables,and help desk support for hardwareproblems occurring on the Participants'surface ships or shore-basedinstallations.

3.1.8.3. Maintenance and repair support ofsupport equipment, including help desksupport, replacement of spares, andrepair of repairables.

3.1.8.4. Training and training support,including training manuals and trainingdocumentation.

3.1.8.5. Maintenance planning efforts that arespecific or peculiar to a Participant'smaintenance systems or processes.

3.1.8.6. Efforts necessary for maintainingrevised configurations within aParticipant's COBLU Systems.

3.1.8.7. Packaging, handling, storage, andtransportation for COBLU Systems,spares, repairables, and supportequipment.

3.1.8.8. Systems engineering, installation, andtroubleshooting relating to BaselineImprovements.

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SECTION IV

MANAGEMENT (ORGANIZATION AND RESPONSIBILITY)

4.1. This Project will be directed and administered on behalfof the Participants by an organization consisting of an SC and aJoint Program Office(JP0) headed by a Project Manager (PM). TheSC will have overall authority over the PM, in accordance withthis MOU. The PM will have primary responsibility for effectiveimplementation, efficient management, and direction of theProject in accordance with this MOU.

4.2. The SC will consist of a representative designated by eachParticipant. The SC will meet annually, unless otherwisedetermined by the SC representatives. The SC may also decide toconduct business in a virtual forum via e-mail, teleconference,or videoconference. Each meeting of the SC, whether conductedin person, by teleconference, or by videoconference, will bechaired by the representative of the Participant hosting crarranging the meeting. Decisions of the SC will be madeunanimously. In the event that the SC is unable to reach atimely decision on an issue, each SC representative will referthe issue to its higher authority for resolution. The approvedProject Plan will continue to be implemented withoutinterruption under the direction of the PM while the issue isbeing resolved by higher authority.

4.3. The SC will be responsible for:

4.3.1.

4.3.2.

4.3.3.

Exercising executive-level oversight of theProject.

Reviewing progress towards accomplishing SectionII (Objectives) and Section III (Scope of Work)of this MOU.

Approving the Project Plan submitted by the PM inaccordance with subparagraph 4.6.2. of thisSection, and any revisions thereto, and reviewingthe technical progress of the Project against theProject Plan. The Project Plan will include, butnot be limited to, the following elements:

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4.3.3.1. Detailed scope of work andcorresponding work schedule, asappropriate.

4.3.3.2. References to applicable acquisitionapproval processes and documents.

4.3.3.3. Project Direction for Contracts (PDC)submitted by the PM in accordance withsubparagraph 4.6.3. of this Section,and any revisions thereto.

4.3.4.

4.3.5.

Approving the Financial Management ProceduresDocument (FMPD) in accordance with paragraph 5.8.of Section V (Financial Provisions) of this MOU,and any revisions thereto.

Reviewing the financial status cf the Project toensure compliance with the provisions of SectionV (Financial Provisions) of this MOU.

4.3.6. Resolving issues brought forth by the PM.

4.3.7.

4.3.8.

4.3.9.

Reviewing and forwarding to the Participants forapproval recommended amendments to this MOU inaccordance with Section XVII (Amendment,Termination, Entry into Effect, and Duration) ofthis MOU.

Approving plans to manage and control thetransfer of Project Equipment provided by eitherParticipant tc support the execution of theProject in accordance with Section VII (ProjectEquipment) of this MOU.

Approving plans for the disposal of jointlyacquired Project Equipment under this MOU inaccordance with Section VII (Project Equipment)of this MOU.

4.3.10. Maintaining oversight of the security aspects ofthe Project, including reviewing and obtainingapproval from the appropriate Designated SecurityAuthority of a Project Security Instruction (PSI)prior to the transfer of Classified Informationor Controlled Unclassified Information.

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4.3.11. Employing its best efforts to resolve, inconsultation with the export control authoritiesof the Participant concerned, any export controlissues raised by the PM in accordance withsubparagraph 4.6.13. of this Section or raised bya Participant's SC representative in accordancewith subparagraph 8.1.2.4. of Section VIII(Disclosure and Use of Project Information) ofthis MOU.

4.3.12. Providing recommendations to the Participants forthe addition of new Participants in accordancewith Section XIV (Participation of AdditionalNations) of this MOU.

4.3.13. Monitoring Third Party sales and transfersauthorized in accordance with Section XII (ThirdParty Sales and Transfers) of this MOU.

4.3.14. Reviewing the annual status repert submitted bythe PM.

4.4. The JPO will be established in the United States to managethe Project. The U.S Department of the Navy (DON) will appointthe PM, who as head of the JPO, will be responsible forimplementing this MOU and for day-to-day management of theProject.

4.5. The U.K. MOD will provide national representation to theJPO by appointing a Deputy PM (DPM). The DPM will report to thePM heading the JPO.

4.6. The PM will be responsible for:

4.6.1. Managing the cost, schedule, performancerequirements, technical, security, and financialaspects of the Project described in this MOU.

4.6.2. Developing a Project Plan, and any necessaryrevisions thereto, as described in subparagraph4.3.3. of this Section; submitting the ProjectPlan for SC approval; and implementing the planand any revisions upon SC approval.

4.6.3. In consultation with the DPM and the responsibleContracting Officer, developing and submitting

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for SC approval a PDC and any necessary updatesthereto that will be used by the ContractingAgency, as appropriate, to develop Contractingstrategies, requests for proposals, Contracts,and Contract modifications.

4.6.4. Providing the PDC, as approved in accordance withsubparagraph 4.3.3. of this Section, to theresponsible Contracting Officer forimplementation.

4.6.5. Preparing and submitting to the SC for approvalan FMPD in accordance with paragraph 5.8. ofSection V (Financial Provisions) of this MOU andany revisions thereto.

4.6.6. Executing the financial aspects of the Project inaccordance with Section V (Financial Provisions)of this MOU.

4.6.7. Referring issues to the SC that cannot beresolved by the PM.

4.6.8. Developing and recommending amendments to thisMOU to the SC.

4.6.9. Developing and implementing SC-approved plans tomanage and control the transfer of ProjectEquipment provided by either Participant inaccordance with Section VII (Project Equipment)of this MOU.

4.6.10. Developing and implementing SC-approved plans forthe disposal of jointly acquired ProjectEquipment under this MOU in accordance withSection VII (Project Equipment) of this MOU.

4.6.11. Developing and forwarding to the SC a PSI and aSecurity Classification Guide (SCC) for theProject within three months after MOU signature,and implementing them upon final approval.

4.6.12. Forwarding recommendations to the SC for theaddition of new Participants in accordance withSection XIV (Participation of Additional Nations)of this MOU.

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4.6.13. Monitoring export control arrangements requiredto implement this MOU and, if applicable,referring immediately to the SC any exportcontrol issues that could adversely affect theimplementation of this MOU.

4.6.14. Providing an annual status report to the SC.

4.6.15. Appointing a Project security officer.

4.7. The DFM will assist and advise the PM in developing thePDC for SC approval in accordance with subparagraph 4.6.3. ofthis Section.

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SECTION V

FINANCIAL PROVISIONS

5.1. The Participants estimate that the performance of theresponsibilities under this MOU will not cost more than aFinancial Cost Ceiling of 2.39 million (M) Fiscal Year 2008 U.S.dollars. The U.S. dollar will be the reference currency for theProject and the Project fiscal year will be the U.S. fiscalyear. The Financial Cost Ceiling may be changed only upon themutual written consent of the Participants.

5.2. Each Participant will contribute its equitable share ofthe full Financial Costs and Non-financial Costs of the Project,including overhead costs, administrative costs, and costs ofclaims, and will receive an equitable share of the results ofthe Project. Administrative costs include such costs as JPOcosts of travel incurred in support of Project efforts, JPOtraining costs, Contract award, Contract administration, officespace, security services, information technology services,communications services, and supplies.

5.3. The Participants' shares of the Financial Cost Ceiling areas follows:

5.3.1. The U.S. DoD share is 1.390M Fiscal Year 2008

U.S. dollars.

5.3.2. The U.K. MOD share is 1.000M Fiscal Year 2008U.S. dollars.

5.4. The costs associated with the articles and servicesprovided to a Participant and intended solely and exclusivelyfor that Participant's use for its COBLU Systems will be paid bythat Participant.

5.5. Participation in the Project will also include a Non-

financial Cost contribution of personnel by each Participant tothe JPO. The Non-financial Cost contribution of the U.S. DoDwill be the PM. The Non-financial Cost contribution of the U.K.MOD will be the DPM.

5.6. In addition to the shared administrative costs describedin paragraph 5.2. of this Section, the cost of personnel in theJPO will be borne as follows:

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5.6.1. The Host Participant will bear the costs of allpay and allowances of the PM in the JPO.

5.6.2. The Parent Participant will bear the followingCooperative Project Personnel (CPP)-relatedcosts:

5.6.2.1. All pay and allowances of CPP assignedto the JPO.

5.6.2.2. Transportation of CPP, CPP dependents,and their personal property to the JPOlocation prior to commencement of theCPP assignment in the JPC, and returntransportation of the foregoing fromthe JPO location upon completion ortermination of the CPP assignment.

5.6.2.3. Compensation for loss of, or damage to,the personal property of CPP or CPPdependents, subject to the laws andregulations of the Parent Participant'sGovernment.

5.7. The following costs will be borne entirely by theParticipant incurring the costs or on whose behalf the costs areincurred:

5.7.1. Costs associated with national representation atmeetings by non-JPO members.

5.7.2. Costs associated with any unique nationalrequirements identified by a Participant notincluded under paragraph 5.4. of this Section.

5.7.3. Any other costs not expressly stated as sharedcosts or any costs that are outside the scope ofthis MOU.

5.8. The PM will be responsible for establishing the detailedfinancial management procedures under which the Project willoperate. These procedures, which must accord with the nationalaccounting and audit requirements of the Participants, will bedetailed in an FMPD prepared by the PM and subject to theapproval of the SC. Each Participant will fund the Project inaccordance with the estimated schedule of financial

19

contributions contained in the FMPD, which will be consistentwith paragraph 5.9 of this Section.

5.9. The Participants recognize that it may become necessaryfor one Participant, in accordance with the approved PDC, toincur contractual or other obligations for the benefit of theother Participant or both of the Participants prior to receiptof the other Participant's funds. In the event that oneParticipant incurs such contractual or other obligations, theother Participant will pay its equitable share of the Contractor other obligation, and will make such funds available in suchamounts and at such times as may be required by the Contract orother obligation and will pay its equitable share of anydamages and costs that may accrue from the performance of orcancellation of the Contract or other obligation in advance ofthe time such payments, damages, or costs are due. TheParticipant managing the Contract, from initial Contract awardthroughout the period of performance of the Contract, will incursuch obligations consistent with the PDC provided to theresponsible Contracting Officer in accordance with Section IV(Management (Organization and Responsibility)) of this MOU,unless exceptional circumstances arise outside the control ofthe Participant managing the Contract. In the unlikely eventsuch circumstances arise, the Participant managing the Contractwill use its best efforts to consult with the other Participantprior to incurring obligations beyond those envisioned in theapproved PDC.

5.10. A Participant will promptly notify the other Participantif available funds are not adequate to fulfill itsresponsibilities under this MOU. If a Participant notifies theother Participant that it is terminating or reducing its fundingfor this Project, both Participants will immediately consultwith a view toward continuation on a modified basis.

5.11. The U.S. DoD will be responsible for the audit of theprocurement activities for which it is responsible under theProject in accordance with its national practices. The U.S. DoDwill be responsible for the internal audit regardingadministration of the U.K. MOD's Project funds in accordancewith its national practices. Audit reports of such funds willbe made available promptly by the U.S. DoD to the U.K. MOD.

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SECTION VI

CONTRACTING PROVISIONS

6.1. The U.S. DoD (acting through the DON) will be responsiblefor Contracting for this Project in accordance with U.S.Contracting laws, regulations, and procedures. The ContractingOfficer is the exclusive source for providing contractualdirection and instructions to Contractors.

6.2. The PM will be responsible for the coordinating with theresponsible Contracting Officer in the development of PDCrelating to the Project, and providing PDC approved by the SC tothe Contracting Officer in accordance with Section IV(Management (Organization and Responsibilit Y))of this MOU. ThePM will cooperate, as requested, with the Contracting Officer inthe areas of Contract procedures, Contract negotiation,evaluation of offers, Contract award, and Contractmodifications. The PM will review statements of work prior tothe development of solicitations to ensure that they are inaccordance with this MOU. The Contracting Officer will keep thePM advised of all significant developments associated with awardand performance of Project Contracts, and will keep the PMadvised of all financial arrangements with the prime Contractor.

6.3. The Contracting Officer will negotiate to obtain therights to use and disclose Project Information required bySection VIII (Disclosure and Use of Project Information)of thisMOU. The Contracting Officer will insert into prospectiveContracts (and require its Contractors to insert insubcontracts) provisions to satisfy the requirements of thisMOU, including Section VIII (Disclosure and Use of ProjectInformation), Section IX (Controlled Unclassified Information),Section XI (Security), Section XII (Third Party Sales andTransfers), and Section XVII (Amendment, Termination, Entry intoEffect, and Duration), including the export control provisionsin accordance with this MOU, in particular paragraphs 6.4. and6.5. of this Section. During the Contracting process, theContracting Officer will advise Prospective Contractors of theirresponsibility to notify immediately the Contracting Agency,before Contract award, if they are subject to any license oragreement that will restrict their freedom to discloseInformation or permit its use. The Contracting Officer willalso advise Prospective Contractors to employ their best efforts

21

not to enter into any new agreement or arrangement that willresult in restrictions.

6.4. Each Participant will legally bind its Contractors to arequirement that the Contractor will not retransfer or otherwiseuse export-controlled Information furnished by the otherParticipant for any purpose other than the purposes authorizedunder this MOU. The Contractor will also be legally bound netto retransfer the export-controlled Information to anotherContractor cr subcontractor unless that Contractor orsubcontractor has been legally bound to limit use of theInformation to the purposes authorized under this MOU. Export-controlled Information furnished by one Participant under thisMOU may only be retransferred by the other Participant to itsContractors if the legal arrangements required by this paragraphhave been established.

6.5. Each Participant will legally bind its ProspectiveContractors to a requirement that the Prospective Contractorwill not retransfer or otherwise use export-controlledInformation furnished by the other Participant for any purposeother than responding to a solicitation issued in furtherance ofthe purposes authorized under this MOU. Prospective Contractorswill not be authorized use for any other purpose if they are notawarded a Contract. The Prospective Contractors will also belegally bound not to retransfer the export-controlledInformation to a prospective subcontractor unless thatprospective subcontractor has been legally bound to limit use ofthe export-controlled Information for the purpose of respondingto the solicitation_ Export-controlled Information furnished byone Participant under this MOU may only be retransferred by theother Participant to its Prospective Contractors if the legalarrangements required by this paragraph have been established.Upon request by the furnishing Participant, the receivingParticipant will identify its Prospective Contractors andprospective subcontractors receiving such export-controlledInformation.

6.6. In the event the Contracting Officer is unable to secureadequate rights to use and disclose Project Information asrequired by Section VIII (Disclosure and Use of ProjectInformation)of this MOU, or is notified by Contractors crProspective Contractors of any restric t ions on the disclosureand use of Information, the matter will be referred to the SCfor resolution.

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6.7. The Contracting Officer will immediately advise the PM ofany cost growth, schedule change, or performance problems underany Contract for which the Contracting Officer is responsible.The PM will promptly advise the DPM of the Information receivedfrom the Contracting Officer.

6.8. Upon mutual consent, consistent with Section TI(Objectives)of this MOU, a Participant may Contract for theunique national requirements of the other Participant.

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SECTION VII

PROJECT EQUIPMENT

7.1. Each Participant may provide Project Equipment identifiedas being necessary for executing the MOU tc the otherParticipant. Project Equipment will remain the property of theproviding Participant. A list of all Project Equipment providedby one Participant to the other Participant will be developedand maintained by the PM and approved by the SC.

7.2. The receiving Participant will maintain any such ProjectEquipment in good order, repair, and operable condition. Unlessthe providing Participant has authorized the Project Equipmentto be expended or otherwise consumed without reimbursement tothe providing Participant, the receiving Participant will returnthe Project Equipment to the providing Participant in as goodcondition as received, normal wear and tear excepted, or returnthe Project Equipment and pay the cost to restore it. If theProject Equipment is damaged beyond economical repair, thereceiving Participant will return the Project Equipment to theproviding Participant (unless otherwise specified in writing bythe providing Participant) and pay the replacement value whichwill be computed pursuant to the providing Participant'snational laws and regulations. If the Project Equipment is lostwhile in the custody of the receiving Participant, the receivingParticipant will issue a certificate of loss to the providingParticipant and pay the replacement value.

7.3. The providing Participant will deliver Project Equipmentto the receiving Participant at a mutually determined location.Possession of the Project Equipment will pass from the providingParticipant to the receiving Participant at the time of receiptof the Project Equipment. Any further transportation is theresponsibility of the receiving Participant.

7.4. All Project Equipment that is transferred will be used bythe receiving Participant only for the purposes of carrying outthis MOU, unless otherwise consented to in writing by theproviding Participant. In addition, in accordance with SectionXII (Third Party Sales and Transfers) of this MOU, ProjectEquipment will not be re-transferred to a Third Party withoutthe prior written consent of the providing Participant.

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7.5. Project Equipment transferred to one Participant underthis MOU will be returned to the providing Participant prior tothe termination or expiration of this MCU.

7.6. Any Project Equipment which is jointly acquired on behalfof both Participants for use under this MOU wiTil be disposed ofduring this Project or when the Project ceases, as determined bythe SC.

7.7. Disposal of jointly acquired equipment may include atransfer of the interest of one Participant in such ProjectEquipment to the other Participant, or the sale of suchequipment to a Third Party in accordance with Section XII (ThirdParty Sales and Transfers) of this MOU. The Participants willshare the consideration from jointly acquired Project Equipmenttransferred or sold to a Third Party in the same ratio as costsare shared under this MOU.

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SECTION VIII

DISCLOSURE AND USE OF PROJECT INFORMATION

8.1. General

8.1.1. Both Participants recognize that successfulcollaboration depends on the exchange cf Informationnecessary for carrying out this Project. The Participantsintend to acquire sufficient Project Information andrights to use such Information to enable the life cyclesupport of the COBLU System. The nature and amount ofProject Information to be acquired will be consistent withthe objectives stated in Section II (Objectives) andSection III (Scope of Work) of this MOU.

8.1.2. The following export control provisions willapply to the transfer of Project Information:

8.1.2.1. Transfer of Project Information will beconsistent with furnishingParticipant's applicable export controllaws and regulations.

8.1.2.2. Unless otherwise restricted by dulyauthorized officials of the furnishingParticipant at the time of transfer tothe other Participant, all export-controlled Information furnished by oneParticipant to the other Participantmay be retransferred to the otherParticipant's Contractors,subcontractors, ProspectiveContractors, and prospectivesubcontractors, subject to therequirements of paragraphs 6.4. and6.5. of Section VI (ContractingProvisions) of this MOU.

8.1.2.3. Export-controlled Information may befurnished by Contractors,subcontractors, ProspectiveContractors, and prospectivesubcontractors of one Participant'snation to the Contractors,subcontractors, Prospective

26

Contractors, and prospectivesubcontractors of the otherParticipant's nation pursuant to thisMOU, subject to the conditionsestablished in licenses or otherapprovals issued by the Government ofthe former Participant in accordancewith its applicable export control lawsand regulations.

8.1.2.4. If a Participant finds it necessary toexercise a restriction on theretransfer of export-controlledInformation as set out in subparagraph8.1.2.2. of this Section, it willpromptly inform the other Participant.If a restriction is then exercised andthe affected Participant objects, thatParticipant's SC representative willpromptly notify the other Participant'sSC representative and they willimmediately consult in order to discussways to resolve such issues or mitigateany adverse effects.

8.1.3. Notwithstanding any other provision in thissection, disclosure of software and algorithmsfor the COBLU System will only be in accordancewith the Participants' respective nationaldisclosure policies.

8.2. Government Project Foreground Information.

8.2.1. Disclosure: All Project Foreground Informationgenerated by a Participant's military or civilianemployees (hereinafter referred to as "GovernmentProject Foreground Information") will bedisclosed promptly and without charge to theParticipants.

8.2.2. Use: Each Participant may use or have used allGovernment Project Foreground Information withoutcharge for Defense Purposes. The Participantgenerating Government Project ForegroundInformation will also retain all its rights ofuse thereto. Any sale or other transfer to aThird Party will be subject to the provisions of

27

Section XII (Third Party Sales and Transfers) ofthis MOU.

8.3. Government Project Background Information

8.3.1. Disclosure: Each Participant, upon request, willdisclose promptly and without charge to the otherParticipant any relevant Government ProjectBackground Information generated by its militaryor civilian employees, provided that:

8.3.1.1. Such Government Project BackgroundInformation is necessary to or usefulin the Project, with the Participant inpossession of the Informationdetermining, after consulting with therequesting Participant, whether it is"necessary to" or "useful in" theProject.

8.3.1.2. Such Government Project BackgroundInformation may be made available onlyif the rights of holders ofIntellectual Property rights are notinfringed.

8.3.1.3. Disclosure of such Government ProjectBackground Information is consistentwith national disclosure policies andregulations of the furnishingParticipant.

8.3.1.4. Any disclosure or transfer of suchGovernment Project BackgroundInformation to Contractors isconsistent with the furnishingParticipant's export control laws andregulations.

8.3.2. Use: Government Project Background Informationfurnished by one. Participant to the requestingParticipant may be used without charge by or forthe requesting Participant for Project purposes.However, subject to Intellectual Property rightsheld by entities other than the Participants,such Government Project Background Informationmay be used for Defense Purposes by the

28

requesting Participant, without charge, when suchInformation is necessary for the use of ProjectForeground Information. The furnishingParticipant, in consultation with the otherParticipant, will determine whether theGovernment Project Background Information isnecessary for the use of Project ForegroundInformation. The furnishing Participant willretain all its rights with respect to suchGovernment Project Background Information.

8.4. Contractor Project Foreground Information

8.4.1. Disclosure: Project Foreground Informationgenerated and delivered by Contractors(hereinafter referred to as "Contractor ProjectForeground Information") will be disclosedpromptly and without charge to both Participants.

8.4.2. Use: Each Participant may use or have usedwithout charge for Defense Purposes allContractor Project Foreground Informationgenerated and delivered by Contractors of theParticipants. The Participant whose Contractorsgenerate and deliver Contractor ProjectForeground Information will also retain all itsrights of use thereto in accordance with theapplicable Contracts. Any sale or other transferto a Third Party of Contractor Project ForegroundInformation will be subject to the provisions ofSection XII (Third Party Sales and Transfers) ofthis MOU.

8.5. Contractor Project Background Information

8.5.1. Disclosure: A Contracting Participant will makeavailable to the other Participant promptly andwithout charge all Contractor Project BackgroundInformation generated by Contractors that isdelivered under Contracts awarded in accordancewith this MOU. Any other Project BackgroundInformation that is generated by Contractors andthat is in the possession of one Participant willbe made available promptly and without charge tothe other Participant, upon its request, providedthe following conditions are met:

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8.5.1.1. Such Contractor Project BackgroundInformation is necessary to or usefulin the Project, with the Participant inpossession of the Informationdetermining, after consultation withthe requesting Participant, whether itIs "necessary to" or "useful in" :heProject.

8.5.1.2. Such Contractor Project Backgroundinformation may be made available onlyif the rights of holders ofIntellectual Property rights are notinfringed.

8.5.1.3. Disclosure of such Contractor ProjectBackground Information is consistentwith national disclosure policies andregulations of the furnishingParticipant.

8.5.1.4. Any disclosure or transfer of suchContractor Project BackgroundInformation to Contractors isconsistent with the furnishingParticipant's export control laws andregulations.

8.5.2. Use: All Contractor Project BackgroundInformation delivered by Contractors underContracts awarded in accordance with this MOU maybe used by or for the receiving Participant,without charge, for Defense Purposes, subject toany restrictions by holders of IntellectualProperty rights other than the Participants. Anyother Contractor Project Background Informationfurnished by one Participant's Contractors anddisclosed to a requesting Participant may be usedwithout charge by the re questing Participant forProject purposes, subject to any restrictions byholders of Intellectual Property rights otherthan the Participants; also, when necessary forthe use of Project Foreground Information, suchother Contractor Project Background Informationmay be used by the requesting Participant forDefense Purposes, subject to such fair andreasonable terms as may be necessary to be

30

arranged with the Contractor. The furnishingParticipant, in consultation with the requestingParticipant, will determine whether such otherContractor Project Background Information isnecessary for the use of Project ForegroundInformation. The furnishing Participant willretain all its rights with respect to ContractorProject Background Information.

8.6. Alternative Uses of Project Information

8.6.1. Any Project Background Information provided byone Participant will be used by the otherParticipant only for the purposes set forth inthis MOU, unless otherwise consented to inwriting by the providing Participant.

8.6.2. The prior written consent of each Participantwill be required for the use of ProjectForeground Information for purposes other thanthose provided for in this MOU.

8.7. Proprietary Project Information

8.7.1. All Project Information that is subject todisclosure and use restrictions with respect toIntellectual Property rights will be identifiedand marked, and it will be handled as ControlledUnclassified Information or as ClassifiedInformation, depending on its securityclassification.

8.7.2. The provisions of the NATO Agreement on theCommunication of Technical Information forDefence Purposes, done at Brussels on October 19,1970, and the Implementing Procedures for theNATO Agreement on the Communication of TechnicalInformation for Defence Purposes, approved by theNorth Atlantic Council on January 1, 1971 (or anysuccessor agreement and procedures) will apply toProject Information that is subject toIntellectual Property rights.

8.8. Patents

8.8.1. Each Participant will include in all itsContracts for the Project a provision governingthe disposition of rights in regard to Project

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Inventions and Patent rights relating theretothat either:

8.8.1.1. Provides that the Participant will holdtitle to all such Project Inventionstogether with the right to make Patentapplications for the same, free ofencumbrance from the Contractorconcerned; or

8.8.1.2. Provides that the Contractor will holdtitle (or may elect to retain title)for such Project Inventions togetherwith the right to make Patentapplications for the same, whilesecuring for the Participants a licensefor the Project Inventions, and anyPatents thereto, on terms in compliancewith the provisions of subparagraph8.8.2. of this Section.

8.8.2. In the event that a Contractor owns title (orelects to retain title) to any Project Invention,the Contracting Participant will secure for theother Participant non-exclusive, irrevocable,royalty-free licenses under all Patents securedfor that invention, to practice or have practicedthe patented Project Invention throughout theworld for Defense Purposes.

8.8.3. The provisions of subparagraphs 8.8.4. through8.8.7. below will apply in regard to Patentrights for all Project Inventions made by theParticipants' military or civilian employees,including those within Government-ownedfacilities, and for all Project Inventions madeby Contractors for which the ContractingParticipant holds title or is entitled to acquiretitle.

8.8.4. When a Participant has cr can secure the right tofile a Patent application with regard to aProject Invention, that Participant will consultwith the other Participant regarding the filingof such Patent application. The Participant thathas or receives title to such Project Inventionwill, in other countries, file, cause to be

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filed, or provide the other Participant with theopportunity to file on behalf of the Participantholding title, Patent applications covering thatProject Invention. A Participant willimmediately notify the other Participant that aPatent application has been filed. If aParticipant, having filed or caused to be filed aPatent application, abandons prosecution of theapplication or ceases maintaining the Patentgranted or issued on the application, thatParticipant will notify the other Participant ofthat decision and permit the other Participant tocontinue the prosecution or maintain the Patentas the case may be.

8.8.5. Each Participant will be furnished with copies ofPatent applications filed and Patents grantedwith regard to Project Inventions.

8.8.6. Each Participant will grant to the otherParticipant a non-exclusive, irrevocable,royalty-free license under its Patents forProject Inventions, to practice or have practicedthe Project Invention throughout the world forDefense Purposes.

8.8.7. Patent applications to be filed, or assertions ofother Intellectual Property rights, under thisMOU that contain Classified Information will beprotected and safeguarded in a manner no lessstringent than the requirements contained in theNATO Agreement for the Mutual Safeguarding ofSecrecy of Inventions Relating to Defence and forWhich Applications for Patents Have Been Made,done in Paris on September 21, 1960, and itsImplementing Procedures (or any successoragreement and procedures).

8.9. Each Participant will notify the other Participant ofany Intellectual Property infringement claims brought againstthat Participant arising in the course of work performedunder the Project on behalf of the other Participant.Insofar as possible, the other applicable Participant willprovide Information available to it that may assist indefending such claims. Each Participant will be responsiblefor handling such Intellectual Property infringement claimsbrought against it, and will consult with the other

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Participant during the handling, and prior to any settlement,of such claims. The Participants will share the costs ofresolving such Intellectual Property infringement claims inproportion to their financial contributions for that workspecified in Section V (Financial Provisions) of this MOU.

8.10. The Participants will, as permitted by their nationallaws, regulations, and practices, give their authorizationand consent for all use and manufacture in the course of workperformed under the Project of any invention covered byPatent, or as determined to be necessary for work under theProject, authorization and consent for non-commercialcopyright, granted or otherwise provided by their respectivecountries.

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SECTION IX

CONTROLLED UNCLASSIFIED INFORMATION

9.1. Except as otherwise provided in this MOU or as authorizedin writing by the originating Participant, ControlledUnclassified Information provided cr generated pursuant to thisMOU will be controlled as follows:

9.1.1. Such Information will be used only for thepurposes authorized for use of ProjectInformation as specified in Section VIII(Disclosure and Use of Project Information) ofthis MOU.

9.1.2. Access to such Information will be limited topersonnel whose access is necessary for thepermitted use under subparagraph 9.1.1. of thisSection, and will be subject to the provisions ofSection XII (Third Parry Sales and Transfers) ofthis MOU.

9.1.3. Each Participant will take all lawful steps,which may include national classification,available to it to keep such Information freefrom further disclosure (including requests underany legislative provisions), except as providedin subparagraph 9.1.2. of this Section, unlessthe originating Participant consents to suchdisclosure. In the event of unauthorizeddisclosure, or if it becomes probable that theInformation may have to be further disclosedunder any legislative provision, immediatenotification will be given to the originatingParticipant.

9.2. To assist in providing the appropriate controls, theoriginating Participant will ensure that Controlled UnclassifiedInformation is appropriately marked to ensure its "inconfidence" nature. The Participants' export-controlledInformation will be marked in accordance with the applicableParticipant's export control markings as documented in the SCC.The Participants will also decide, in advance and in writing, onthe markings to be placed on any other types of ControlledUnclassified Information and describe such markings in the PSI.

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9.3. Controlled Unclassified Information provided or generatedpursuant to this MCU will be handled in a manner that ensurescontrol as provided for in paragraph 9.1. of this Section.

9.4. Prior to authorizing the release of ControlledUnclassified Information to Contractors, the Participants willensure the Contractors are legally bound to control suchInformation in accordance with the provisions of this Section.

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SECTION X

VISITS TO ESTABLISHMENTS

10.1. Each Participant will permit visits to its Governmentestablishments, agencies and laboratories, and Contractorindustrial facilities by employees of the other Participant orby employees of the other Participant's Contractors, providedthat the visit is authorized by both Participants and theemployees have any necessary and appropriate security clearancesand a need-to-know.

10.2. All visiting personnel will be required to comply withsecurity regulations of the hosting Participant. AnyInformation disclosed or made available to visitors will betreated as if supplied to the Participant sponsoring thevisiting personnel, and will be subject to the provisions ofthis MOU.

10.3. Requests for visits by personnel of one Participant to afacility of the other Participant will be coordinated throughofficial channels, and will conform with the established visitprocedures of the hosting Participant. Requests for visits willbear the name of the Project.

' 10.4. Lists of personnel of each Participant required to visit,on a continuing basis, facilities of the other Participant willbe submitted through official channels in accordance withrecurring international visit procedures.

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SECTION XI

SECURITY

11.1. All Classified Information provided or generated pursuantto this MOU will be stored, handled, transmitted, andsafeguarded in accordance with the General Security Agreementbetween the Government of the United Kingdom of Great Britainand Northern Ireland and the Government of the United States ofAmerica, dated April 14, 1961, as amended, including theSecurity Implementing Arrangement of January 27, 2003.

11.2. Classified Information will be transferred only throughofficial government-to-government channels or through channelsapproved by the Designated Security Authorities (DSAs) of theParticipants. Such Classified Information will bear the levelof classification and denote the country of origin, theprovisions of release, and the fact that the Information relatesto this MOU.

11.3. Each Participant will take all lawful steps available toit to ensure that Classified Information provided or generatedpursuant to this MOU is protected from further disclosure,except as permitted by paragraph 11.8. of this Section, unlessthe other Participant consents to such disclosure. Accordingly,each Participant will ensure that the recipient:

11.3.1. Will not release the Classified Information toany Government, national, organization, or otherentity of a Third Party except as permitted underthe procedures detailed in Section XII (ThirdParty Sales and Transfers) of this MOU:

11.3.2. Will not use the Classified Information for otherthan the purposes provided for in this MOU.

11.3.3. Will comply with any distribution and accessrestrictions on Classified Information that isprovided under this MOU.

11.4. The Participants will investigate all cases in which it isknown or when there are grounds for suspecting that ClassifiedInformation provided or generated pursuant to this MOU has beenlost or disclosed to unauthorized persons. Each Participantalso will promptly and fully inform the other Participant of thedetails of any such occurrences, and of the final results of the

38

investigation and of the corrective action taken to precluderecurrences.

11.5. The PM will prepare a PSI and an SCG for the Project. ThePSI and the SCG will describe the methods by which ProjectInformation will be classified, marked, used, transmitted, andsafeguarded and will require that markings for all export-controlled Classified Information will include the applicableexport control markings identified in the PSI in accordance withparagraph 9.2. of Section IX (Controlled UnclassifiedInformation) of this MOU. The PSI and CG will be developed bythe PM within three months after this MOU enters into effect.They will be reviewed and forwarded to the Participants' DSAsfor approval and will be applicable to all Government andContractor personnel participating in the Project. The CG willbe subject to regular review and revision with the aim ofdowngrading the classification whenever this is appropriate.The PSI and the CG will be approved by the appropriate DSA priorto the transfer of any Classified Information or ControlledUnclassified Information.

11.6. The DSA of the Participant that awards a classifiedContract will assume responsibility for administering within itsterritory security measures for the protection of the Classifiedinformation, in accordance with its laws and regulations. Priorto the release to a Contractor, Prospective Contractor, orsubcontractor of any Classified Information received under thisMOU, the DSAs or their designees will:

11.6.1. Ensure that such Contractor, ProspectiveContractor, or subcontractor and their facilitieshave the capability to protect the ClassifiedInformation adequately.

11.6.2. Grant a security clearance to the facilities, ifappropriate.

11.6.3. Grant a security clearance for all personnel withduties that require access to ClassifiedInformation, if appropriate.

11.6.4. Ensure that all persons having access to theClassified Information are informed of theirresponsibilities to protect the ClassifiedInformation in accordance with national securitylaws and regulations and provisions of this MOU.

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11.6.5. Carry out periodic security inspections ofcleared facilities to ensure that the ClassifiedInformation is properly protected.

11.6.6. Ensure that access to the Classified Informationis limited to those persons who have a need-to-know for purposes of the MOU.

11.7. Contractors, Prospective Contractors, or subcontractors,that are determined by DSAs to be under financial,administrative, policy, or management control of nationals orentities of a Third Party, may participate in a Contract orsubcontract requiring access to Classified Information providedor generated pursuant to this MOU only when enforceable measuresare in effect to ensure that nationals or other entities of aThird Party will not have access to Classified Information. Ifenforceable measures are not in effect to preclude access bynationals or other entities of a Third Party, the otherParticipant will be consulted for approval prior to permittingsuch access.

11.8. For any facility wherein Classified Information is to beused, the responsible Participant or Contractor will approve theappointment of a person or persons to exercise effectively theresponsibilities for safeguarding at such facility theInformation pertaining to this MOU. These officials will beresponsible for limiting access to Classified Informationinvolved in this MOU to those persons who have been properlyapproved for access and have a need-to-know.

11.9. Each Participant will ensure that access to the ClassifiedInformation is limited to those persons who possess requisitesecurity clearances and have a specific need for access to theClassified Information in order to participate in the Project.

11.10. Information provided or generated pursuant to this MOUmay be classified as high as TOP SECRET Sensitive CompartmentedInformation. The existence of this MOO is unclassified and thecontents are unclassified.

4C

SECTION XII

THIRD PARTY SALES AND TRANSFERS

12.1. The U.S. DoD will not sell, transfer title to, disclose,or transfer possession of Project Foreground Information,jointly acquired Project Equipment, or any item produced eitherwholly or in part from Project Foreground Information to anyThird Party without prior consultation with the U.K. MOD and, inthe case of classified Project Foreground Information for whichthe U.K. MOD is the originating Participant, without the priorwritten consent of the U.K. MOD. Furthermore, the U.S. DoD willnot permit any such sale, disclosure, or transfer, includinc bythe owner of the item, without prior consultation with the U.K.MOD. The U.S. DOD recognizes the importance to the U.K. MOD thatU.S. DoD decisions on such potential sales, disclosures, andtransfers take into account the views cn security matters heldby the U.K. MOD. The U.S. DoD recognizes that sales,disclosures, or other transfers described in this paragraph willonly be made if the government of the intended recipientconsents in writing that it will:

12.1.1. Not retransfer, or permit the further retransferof, any equipment or Information provided.

12.1.2. Use, or permit the use of, the equipment orInformation provided only for the purposes forwhich such equipment or Information is furnished.

12.2. The U.K. MOD will not sell, transfer title to, disclose,or transfer possession of Project Foreground Information,jointly acquired Project Equipment, or any item produced eitherwholly or in part from Project Foreground Information to anyThird Party without the prior written consent of the U.S.Government. Furthermore, the U.K. MOD will not permit any suchsale, disclosure, or transfer by others, including the owner ofthe item, without the prior written consent of the U.S.Government. The U.K. MOD recognizes that such sales,disclosures, or other transfers will not be authorized by theU.S. Government unless the government of the intended recipientconfirms in writing with the U.S. Government that it will:

12.2.1. Not retransfer, or permit the further retransferof, any equipment or Information provided.

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12.2.2. Use, or permit the use of, the equipment orInformation provided only for the purposes forwhich such equipment or Information is furnished.

12.3. A Participant will not sell, transfer title to, disclose,or transfer possession of Project Background Information orProject Equipment provided by the other Participant to any ThirdParty without the prior written consent of the Government of theParticipant that provided such equipment or Information. Theproviding Participant's Government will be solely responsiblefor authorizing such transfers and, as applicable, specifyingthe method and provisions for im plementing such transfers.

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SECTION XIII

LIABILITY AND CLAIMS

13.1. Claims arising under this MOU will be dealt with underparagraph 1 of the Agreement Concerning Defense CooperationArrangements of May 27, 1993 between the Government of theUnited States of America and the Government of the UnitedKingdom of Great Britain and Northern Ireland as amended by theExchange of Notes between the Government of the United States ofAmerica and the Government of the United Kingdom of GreatBritain and Northern Ireland of June 1, 2007. The cost ofclaims addressed in paragraph 1(b)(ii) of that A greement will beshared in the same ratios as the Participants' financialcontributions specified in this MOU.

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SECTION XIV

PARTICIPATION OF ADDITIONAL NATIONS

14.1. It is recognized that other national defense organizationsmay wish to join the Project.

14.2. The mutual consent of the Participants will be required toconduct discussions with potential additional Participants. TheParticipants will discuss the arrangements under which anotherParticipant might join, including the furnishing of releasableProject Information for evaluation prior to joining. If thedisclosure of Project Information is necessary to conductdiscussions, such disclosure will be in accordance with SectionVIII (Disclosure and Use of Project Information), Section IX(Controlled Unclassified Information), and Section XII (ThirdParty Sales and Transfers) of this MOU.

14.3. The Participants will jointly formulate the provisionsunder which additional Participants might join. The addition ofnew Participants to the Project will require amendment of thisMOU by the Participants.

44 4

SECTION XV

CUSTOMS DUTIES, TAXES, AND SIMILAR CHARGES

15.1. Customs duties, import and export taxes, and similarcharges will be administered in accordance with eachParticipant's respective laws and regulations. Insofar asexisting national laws and regulations permit, the Participantswill endeavor to ensure that such readily identifiable customsduties, import and export taxes, and similar charges, as well asquantitative or other restrictions on imports and exports, arenot imposed in connection with work carried out under thisProject.

15.2. Each Participant will use its best efforts to ensure thatcustoms duties, import and export taxes, and similar charges areadministered in a manner favorable to the efficient andeconomical conduct of the work of this Project. If any suchcustoms duties, import and export taxes, or similar charges arelevied, the Participant in whose country they are levied willbear such costs over and above that Participant's shared costsof the Project.

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SECTION XVI

SETTLEMENT OF DISPUTES

16.1. Disputes between the Participants arising under orrelating to this MOU will be resolved only by consultationbetween the Participants and will not be referred to a nationalcourt, an international tribunal, or to any other person orentity for settlement.

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SECTION XVII

AMENDMENT, TERMINATION, ENTRY INTO EFFECT, AND DURATION

17.1. All activities of the Participants under this MOU will becarried out in accordance with their respective national lawsand regulations, including their respective export control lawsand regulations. The responsibilities of the Participants willbe subject to the availability of funds for such purposes.

17.2. No requirement will be imposed by a Participant forworksharing or other industrial or commercial compensation inconnection with this MOU that is not in accordance with thisMOU.

17.3. In the event of a conflict between a Section of this MOUand any Annex to this MOU, the Section of the MOU will control.

17.4. Except as otherwise provided, this MOU may be amended bythe mutual written consent of the Participants.

17_5. This MOU may be terminated at any time upon the writtenconsent of the Participants. In the event both Participantsconsent to terminate this MOU, the Participants will consultprior to the date of termination to ensure termination in themost economical and equitable manner.

17.6. Either Participant may terminate this MOU upon one hundredeighty (180) days written notification to the other Participantof its intent to terminate. Such notice will be the subject ofimmediate consultation by the SC to decide upon the appropriatecourse of action to conclude the activities under this MOU. Inthe event of such termination, the following rules apply:

17.6.1. The Participant terminating this MOU willcontinue participation, financial or otherwise,up to the effective date of termination.

17.6.2. Except as to Contracts awarded on behalf of bothParticipants, each Participant will beresponsible for its own Project-related costsassociated with termination of the Project. ForContracts awarded on behalf of both Participants,the Participant terminating this MOU will pay allContract modification or termination costs thatwould not otherwise have been incurred but for

47

the decision to terminate; in no event, however,will a terminating Participant's total financialcontribution, including Contract terminationcosts, exceed that Participant's total share ofthe Financial Cost Ceiling for financialcontributions as established in Section V(Financial Provisions) of this MOU.

17.6.3. All Project Information and rights thereinreceived under the provisions of this MOU priorto the termination of this MOU will be retainedby the Participants, subject to the provisions ofthis MOU.

17.6.4. If requested by the other Participant, theterminating Participant may continue toadminister the Project Contract(s) that itawarded on behalf of the other Participant on areimbursable basis.

17.7. The respective benefits and responsibilities of theParticipants regarding Section VII (Project Equipment), SectionVIII (Disclosure and Use of Project Information), Section IX(Controlled Unclassified Information), Section XI (Security),Section XII (Third Party Sales and Transfers), Section XIII(Liability and Claims), Section XVI (Settlement of Disputes),and this Section XVII (Amendment, Termination, Entry intoEffect, and Duration) will continue to apply notwithstandingtermination or expiration of this MOU.

17.8. This MOU, which consists of seventeen (17) Sections, andone (1) Annex, will enter into effect upon signature by bothParticipants and will remain in effect for five years. It maybe extended by written concurrence of the Participants.

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Signa ure Signature

VICTOR JENKINS

The foregoing represents the understandings reached between theDepartment of Defense of the United States of America and theSecretary of State for Defence of the United Kingdom of GreatBritain and Northern Ireland.

Signed, in duplicate, by authorized representatives of theParticipants.

FOR THE DEPARTMENT OF DEFENSE OFT14.W....,Uyq ED STATES OF AMERICA

FOR THE SECRETARY OF STATEFOR DEFENCE OF THE UNITEDKINGDOM NORTHERN IRELAND

RDML NEVIN P. ARR, JR.Name NameDeputy Assist nt Secretary ofthe Navy (International Programs) Director General, ISTAR

TitleJUN 2 5 2008

Title

Date Date

Arlington, VA Bristol, U.K.Location Location

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ANNEX A

COOPERATIVE PROJECT PERSONNEL

1.0. Purpose and Scope

1.1. This Annex establishes the provisions that willgovern the conduct of Cooperative Project Personnel(CPP). The Parent Participant will assign militarymembers or civilian employees to the JPO inaccordance with Section IV (Management (Organizationand Responsibility)) of this MOU and this Annex.CPP must be able to perform all the responsibilitiesassigned to them under this MOU. Commencement ofassignments will be subject to any requirements thatmay be imposed by the Host Participant or itsGovernment regarding acceptance of CPP, such as, butnot limited to, visas and visit requestdocumentation. The SC will determine the length oftour for the positions at the time of initialassignment.

1.2. CPP will be assigned to the JPO for Project work andwill report to their designated JPO supervisorregarding that work. The PM will be responsible forthe creation of a document describing the duties ofeach CPP position, which will be subject to approvalby the SC. CPP will not act as liaison officers onbehalf of the Parent Participant. CPP may act fromtime to time on behalf of their respective SC memberif the latter so authorizes in writing.

1.3. CPP will not be assigned to command or otherpositions that would require them to exerciseresponsibilities that are reserved by law orregulation to an officer or employee of the HostParticipant's Government.

2.0. Security

2.1'. The SC will establish the maximum level of securityclearance required, if any, to permit CPP to haveaccess to Classified Information and facilities inwhich Classified Information is used in accordancewith the PSI and SCG. Access to Classified

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Information and facilities in which ClassifiedInformation is used will be consistent with, andlimited by, Section II (Ob j ectives) and Section(Scope of Work) of this MOU and will be kept to theminimum required to accomplish the work assignments.

2.2 The Parent Participant will file visit requests forthe CPP through prescribed channels in compliancewith the Host Participant's procedures. As part ofthe visit request procedures, the Parent Participantwill provide security assurances, through the U.K.Embassy in Washington, D.C. and specify the securityclearances for the CPP being assigned.

2.3. The Host Participant and Parent Participant will usetheir best efforts to ensure that CPP assigned tothe JP0 are aware of, and comply with, applicablelaws and regulations as well as the requirements ofSection IX (Controlled Unclassified Information),Section X (Visits to Establishments), Section XI(Security), and paragraph 17.7. of Section XVII(Amendment, Termination, Entry into Effect, andDuration) of this MOU and the provisions of the PSIand SCG. Prior to commencing assigned duties, CPPwill, if required by the Host ParticipantGovernment's laws, regulations, policies, orprocedures, sign a certification concerning theconditions and responsibilities of CPP.

2.4. CPP will at all times be required to comply with thesecurity and export control laws, regulations, andprocedures of the Host Participant's Government.Any violation of security procedures by CPP duringtheir assignment will be reported to the ParentParticipant for appropriate action. CPP committingsignificant violations of security and exportcontrol laws, regulations, or procedures duringtheir assignments will be withdrawn from the Projectwith a view toward appropriate administrative ordisciplinary action by their Parent Participant.

2.5. All Classified Information made available to CPPwill be considered as Classified Informationfurnished to the Parent Participant, and will besubject to all provisions and safeguards providedfor in Section XI (Security) cf this MOU.

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2.6. CPP will not have personal custody of ClassifiedInformation or Controlled Unclassified Informationunless, approved by the Host Participant and asauthorized by the Parent Participant. They will begranted access to such Information in accordancewith Section IX (Controlled UnclassifiedInformation) and Section XI (Security) of this MOUduring normal duty hours at the JPO and when accessis necessary to perform Project work.

2.7. CPP assigned to the JPO will not serve as a conduitbetween the Host Participant and Parent Participantfor requests and/or transmission of ClassifiedInformation or Controlled Unclassified Informationunless specifically authorized by the Participants.

3.0. Technical and Administrative Matters

3.1. The tax treatment of income received by CPP from theParent Participant will be determined by referenceto the tax legislation of the Government of the HostParticipant and the Government of the ParentParticipant, subject to the terms of any doubletaxation agreement in force between the Governmentof the Host Participant and the Government of theParent Participant, or by the terms of the NATOStatus of Forces Agreement.

3.2. On arrival, CPP will be provided briefings arrangedby the JPO about applicable laws, orders,regulations, and customs and the need to comply withthem. CPP will also be provided briefings arrangedby JPO regarding entitlements, privileges, andobligations such as:

3.2.1. Any medical and dental care that may beprovided to CPP and their dependents at HostParticipant medical facilities, subject tothe requirements of applicable laws andregulations, including reimbursementrequirements.

3.2.2. Purchasing and patronage privileges atmilitary commissaries, exchanges, theaters,and clubs for CPP and their dependents,subject to the requirements of applicablelaws and regulations.

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3.2.3. Responsibility of CPP and their accompanyingdependents to obtain motor vehicle liabilityinsurance coverage in accordance with thelaws and regulations applicable in the areawhere they are residing. In case of claimsinvolving the use of private motor vehiclesby CPP, the recourse will be against suchinsurance.

3.3. The PM, through the JPO, will, in consultation withthe CPP, establish standard operating procedures forCPP in the following areas:

3.3.1. Working hours, including holiday schedules.

3.3.2. Leave authorization, consistent to theextent possible with the military andcivilian personnel regulations and practicesof the Host Participant and ParentParticipant.

3.3.3. Dress regulations, consistent to the extentpossible with the military and civilianpersonnel regulations and practices of theHost Participant and Parent Participant.

3.3.4. Performance evaluations, recognizing thatsuch evaluations will be rendered inaccordance with the Parent Participant'smilitary or civilian personnel regulationsand practices.

3.4. CPP committing an offense under the laws of theGovernment of the Host Participant or ParentParticipant may be withdrawn from this Project witha view toward further administrative or disciplinaryaction by the Parent Participant. Disciplinaryaction, however, will not be taken by the HostParticipant against CPP, nor will the CPP exercisedisciplinary powers over the Host Participant'spersonnel. In accordance with the laws andregulations of the Host Participant's Government,the Host Participant will assist the ParentParticipant in carrying out investigations ofoffenses involving CPP.

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3.5. The provisions of the NATO Status of ForcesAgreement regarding the rights of a sending state'smilitary personnel and civilian employees and theirrespective dependents will apply to CPP.

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