term trends, of R&D cooperation and purI chases between the two nations will be prepared on a basis to be mutually agreed. Such statement will take account of United States-Netherlands purchases of defense equipment and services and related offset agreements effected in the years from 1973 onwards and will be periodically reviewed.

Article VI-Annexes

Annexes negotiated by the responsible officials and approved by the appropriate Government authorities will be incorporated in this MOU.

Article VII-Duration

1. This MOU will remain in effect for a ten-year period and will be extended for successive five-year periods, unless the Governments mutually decide otherwise.

2. If, however, either Government considers it necessary for compelling national reasons to terminate its participation under this MOU before the end of the ten-year period, or any extension thereof, written notification of its intention will be given to the other Government six months in advance of the effective date of termination. Such notification of intent shall become a matter of immediate consultation with the other Government to enable the Governments fully to evaluate the consequences of such termination and, in the spirit of cooperation, to take such actions as necessary to alleviate problems that may result from the termination. In this connection, although the MOU may be terminated by the Parties, and contract entered into consistent with the terms of this MOU shall continue in effect, unless the contract is terminated in accordance with its own terms.

3. The Parties hereto agree that, for the purposes of this MOU, references to the Kingdom of the Netherlands shall apply only to its territory in Europe.

Article VIII-Implementation

This MOU will come into effect on the date of the last signature.

For the Government of the Kingdom of the Netherlands.

WILLEM SCHOLTEN, The Minister of Defense.

Dated: August 24, 1978. For the Government of the United States of America.

HAROLD BROWN, The Secretary of Defense.

Dated: July 25, 1978.

ANNEX I-PRINCIPLES GOVERNING IMPLEMENTATION

1. Introduction

On 24 August 1978, the Governments of the United States and the Kingdom of the Netherlands signed a Memorandum of Understanding (MoU) relating to the principles governing mutual cooperation in research and development, production and procurement of defense equipment. This document sets forth the agreed implementing procedures for carrying out the MOU.

2. Major Principles

A. The U.S. Department of Defense (DoD) and the Ministry of Defense of the Netherlands (MoD) will consider for their defense requirements qualified defense items and services developed or produced in the other country.

B. It will be the responsibility of government and/or industry representatives in each country to acquire information concerning the other country's proposed research, developments, and purchases and to respond to requests for proposals in accordance with the prescribed procurement procedures and regulations. However, the responsible government agencies in each country will assist sources in the other country to obtain information concerning, intended research and development, proposed purchases, necessary qualifications and appropriate documentation.

3. Action

DoD and MoD will review and, where considered necessary, revise policies, procedures and regulations to ensure that the principles and objectives of this MOU, which are intended to be compatible with the broad aims of NATO Rationalization/Standardization, are taken into account. DoD and MOD agree that the following measures shall be taken, recognizing that among other factors, delivery date requirements for supplies, the interest of security and the timely conduct of the procurement process, are considerations related to insured free and full competition for the award of contracts:

A. Ensure that their respective requirements offices are familiar with the principles and objectives of this MoU.

B. Ensure that their respective research and development offices and institutes are familiar with the principles and objectives of this MoU.

C. Ensure that their respective procurement offices are familiar with the principles and objectives of this MOU.

D. Ensure wide dissemination of the basic understanding of this MoU to their respective industries producing and/or developing defense items and/or services.

E. Ensure that, consistent with national laws and regulations, offers of defense items produced in the other country will be evaluated without applying to such offers, either price differentials under buy-national laws and regulations, or the cost of import duties. Full consideration will be given to all qualified industrial and/or governmental sources in each other's country. Provisions will be made for duty-free entry certificates and related documentation to the extent that existing laws and regulation permit.

F. Assist industries in their respective countries to identify and advise the other government of their production capability and assist such industries in carrying out the supporting actions to maximize industrial participation.

G. Review defense items and requests for services submitted by the other country as candidates for respective requirements. Identify requirements and proposed purchases to the other country in a timely fashion to ensure that the industries of such country are afforded adequate time to be able to participate in the research and development production and procurement processes.

H. Use best efforts to assist in negotiating licenses, royalties, and technical information exchanges among their respective industries, and research and development institutes.

I. Ensure that those items and services excluded from consideration under this MoU for reasons of protecting national requirements, such as the maintenance of a defense mobilization base, are limited to a small percentage of total annual defense procurement spending. It is intended that such defense items and services, as well as those items and services that must be excluded from consideration under this MoU because of legally imposed restrictions on procurement from non-national sources, be identified as soon as possible by the MoD and the DoD, and that such defense items and services be kept under review at this level.

J. Insure that the balance of reciprocal purchases takes into consideration the levels of technology involved, as well as the monetary value of purchase hereunder.

k. DoD and MoD will from time to time arrange visits in order to actively explore possibilities for cooperation on research and development, procurement, and logistical support.

4. Counting Procedures

The following purchases, to be identified jointly by DoD and MoD will be included in the counting procedures:

A. Purchases of items and services funded from appropriate funds of the U.S. Department of Defense or budgeted funds of the Netherlands Ministry of Defense and which, either/are:

(1) Directly purchased by the MoD or DoD from one another, or

(2) Directly purchased by the MoD or DoD from the industry of the other country; or

(3) Purchased by the industry of one country from the Government or industry of the other country; or

(4) Purchased as a result of jointly funded defense projects to which the United States and the Netherlands are the only contributors to be credited in proportion to each other country's financial contributions to the project, and to work carried out in each country. The extent to which such purchases will be counted against the goals of the MoU will be agreed upon between MOD and DoD in each case;

(5) License fees, royalties and other associ ated income, when separately contracted by industry and/or DoD or MoD with a licensor in the country.

B. Purchases by the MoD or DoD from the industry of the other country, on half of other governmental departments and agencies.

C. Purchases by a third country government from the MOD or DoD or from industries of these two countries as direct result of the efforts of the government of the other country.

5. Administration

A. Each government will designate points of contact (procurement and logistics) at the Ministry of Defense level and in each purchasing service/agency and major acquisition activity.

B. Quality Assurance procedures outlined in STANAG 4107 and 4108 (subject to the USG reserve concerning reimbursement) will apply, unless other provisions are mutually agreed to on any specific contract. Reimbursement of services provided shall be afforded in accordance with the national laws and regulations of each country.

C. The terms of reference of the Netherlands/United States Committee of Procurement Cooperation is contained in Annex III. For the Government of the United States of America.

DR. WILLIAM J. PERRY.

Dated: December 22, 1978.
For the Government of the Netherlands.
LT. GENERAL HENSEN.

Dated: December 22, 1978.
(Appendices to Annex 1 not included.)
ANNEX II-PRINCIPLES GOVERNING LOGISTIC
SUPPORT OF COMMON EQUIPMENT

In implementing Article I, para 13, of the MOU, the two Parties shall be governed by the following:

1. When developing or procuring defense equipment, both Parties will agree upon the asis for joint follow-on logistic support in reas such as configuration control, interchangeability of spare parts/components, naintenance, conversion, storage, and spare arts provisioning, etc.

2. Arrangements and procedures will be stablished concerning follow-on logistic upport and other forms of logistic cooperaion, e.g., joint utilization of facilities.

3. In the contracting procedure for logistic upport, paragraph 9 of Article I of the MoU shall apply.

4. Both Parties will issue directives and uidelines to their respective armament and ogistics agencies to achieve the described oals of this MOU.

For the Government of the United States f America.

DR. WILLIAM J. PERRY. Dated: December 21, 1978.

For the Government of the Netherlands. LT. GENERAL HENSEN. Dated: December 21, 1978.

ANNEX III-TERMS OF REFERENCES

1. The Netherlands/U.S. Committee for Procurement Cooperation (hereafter to be alled "the Committee") will serve, under he direct responsibility of the authorities, isted in Article II sub 2 and 3 of the MOU espectively, as the main body in charge of he adequate implementation of the MoU.

2. In particular, the Committee will be reponsible for ensuring that the guiding priniples of the MoU governing the mutual cooperation in research and development, proluction, procurement and logistic support of conventional defense equipment are being implemented to facilitate a mutual low of defense equipment. To this end the Committee will meet as required, but not ess than annually, to review progress in implementing the MOU. In this review:

A. They will discuss research, development, production, procurement and logistic support needs of such country and the likely areas of cooperation including joint activities in those fields.

B. They will exchange information as to the way the stipulations of the MoU have been carried out and, if need be, prepare proposals for amendments of the MoU and/ or its annexes.

C. They will agree to the financial statement of the current balance, give guidance for its yearly preparation and formulate conclusions from it, such conclusions to include any long term trends which may be established.

D. They will consider any other matters relevant to the MOU.

E. They will report after each meeting and advise as appropriate.

F. The Committee will alternately meet in the United States and in the Netherlands. The country in which a particular meeting will take place will provide the Chairman and the secretariat for that meeting.

For the Government of the United States of America.

DR. WILLIAM J. PERRY.

Dated: December 21, 1978.

For the Government of the Netherlands. LT. GENERAL HENSEN.

Dated: December 21, 1978.

ANNEX IV TO MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA CONCERNING THE PRINCIPLES GovERNING MUTUAL COOPERATION IN THE RESEARCH AND DEVELOPMENT, PRODUCTION AND PROCUREMENT OF DEFENSE EQUIPMENT, SIGNED AT THE HAGUE ON 24 August 1978

Principles Governing Contract Administration Services

I. Introduction

This annex sets forth the terms, conditions, and procedures under which the governments will provide each other with selected contract administration services and related information in support of defense contracts and subcontracts contemplated or executed under the Memorandum of Understanding (MOU). It is recognized that in the event conflicts arise between any aspect of this annex and the laws of either government, the laws shall prevail.

II. Major Principles

The objective of this annex is to insure each government is able to employ the most effective and efficient contract administration support possible when acting under the MOU. Nothing is to be construed as impairing a purchasing government's access to its contractors and their records as may be contractually authorized.

For the purpose of this annex, contract administration shall include all those necessary actions, other than contract pricing and audit, to be accomplished at, or in proximity to, a firm's place of business to assist the purchasing office in evaluating a prospective contractor's capabilities and in monitoring and enforcing awarded contracts. This annex supplements NATO Standardization Agreement (STANAG) 4107, hereby incorporated by reference in regard to reciprocal quality assurance.

III. General

The purchasing government may request specific services and information selected

from those listed in Appendix 1 to this annex which it considers appropriate to the circumstances. The purchasing government may elect to obtain additional support through its own on-site representatives provided there is no duplication of work performed by the host government. In addition, the host government will use its best efforts to supply information requested by the purchasing government but not listed in this annex when necessary to support contract award, enforcement, or termination. The purchasing government may modify a request for support during contract performance after consultation with the host government.

The host government shall accept requests for services to the extent resources are available and carry them out according to the procedures that government uses for its own contracts.

Contracts shall contain suitable provisions for the host government to act for and on behalf of the purchasing government and shall authorize access to contractor facilities and records and use of contractor assets as necessary for the performance of contract administration services.

Where representatives of either government deal with a contractor at the same location in support of the same contract or separate contracts, they shall act in full concert according to terms of reference mutually agreed or to be agreed upon.

Each government shall designate a single office to receive requests for contract administration services. In addition, each government may elect to designate an office in or near the other's country to act as a focal point through which requests for support will be forwarded. The host government will endeavor to keep the purchasing government's focal point apprised of current contract administration practices and resources to help insure requests for services are reasonable and prudent. The focal point shall advise the host government concerning contract requirements and clarify requests for services as necessary.

IV. Procedures

Requests for contract administration in The Netherlands shall be directed to the Ministry of Defense, Directorate-General Materiel. Procurement Policy Office. Kalvermarkt 32. P.O. Box 20701 2500 ES THE HAGUE The Netherlands. Requests for contract administration in the United States shall be directed to The Department of Defense Central Control Point, DCASR New York, 60 Hudson St., New York, NY 10013.

Contract administration requests will be accompanied by the number of copies of the request for proposal or awarded contract, as appropriate, prescribed in STANAG 4107 and will specify the contract administration

services desired. Every effort will be made to forward support requests simultaneously with the forwarding of awarded contracts to the contractor. The format shall be as described in Annex A to STANAG 4107, with desired services other than quality assur ance specified in Block 10. If less than comprehensive quality assurance is needed, the desired services selected from AQAP 10 shall be specified in Block 10. Requests shall reference this annex to the MOU and shall be processed according to the procedures in STANAG 4107 with due regard to section VII of this annex. In principle, acceptance or rejection shall be made within 30 calendar days of receipt by the host government.

Direct communications between the purchasing office and the assigned contract administration office in resolving contract problems are authorized and encouraged The purchasing government shall retain final authority over contract interpretations and enforcement actions, and shall advise the contract administration office on such matters as needed.

In the event the purchasing government envisions the assignment of inplant repre sentatives, proposed terms of reference de scribing an appropriate working relationship with host government representatives will be suggested to the host government as early as possible.

V. Responsibility and Liability

Nothing in this annex shall relieve the contractor of any responsibilities under the contract. No liability will attach to the gov ernment, its officers or agents, acting under this annex on behalf of the other govern ment.

VI. Protection of Information

Data obtained through the implementa tion of this annex shall receive the same protection against unauthorized disclosure as such data would normally receive under the laws and rules of the country which pos sesses it.

VII. Charges

Service provided under this annex will be free of charge, subject to a joint review of the services being exchanged at not less than three year intervals. If, as a result of such a joint review, either government determines that charges will be necessary. they may be imposed after not less than one year advance notice. Should charges by the U.S. Government become necessary, Foreign Military Sales Procedures then in effect will apply.

VIII. Duration

This annex will remain in effect for a period as set forth in ARTICLE VII of the

MOU, and may be terminated under the conditions as set forth in that article.

IX. Implementation

This Annex will come into effect on the late of the last signature.

For the Government of the Kingdom of he Netherlands.

Date 9th April 1982.

For the Government of the United States f America.

Date 9 April 1982.

Appendix 1. Services to be Exchanged. APPENDIX 1 TO ANNEX IV-SERVICES TO BE EXCHANGED

In accordance with the principles and proedures as set forth in this annex the folwing services will be performed by the ost government within its national boundries upon requests by and on behalf of the urchasing government:

1. Support evaluations of contractor capailities prior the award.

a. Supply available information concerng design, production, and quality control Capabilities as appropriate; for example, the mount of available floor space, plant equipent, skilled and unskilled workers, past roduction of similar items, and the NATO llied Quality Assurance Publications AQAP's) against which the firm has been ssessed.

b. Evaluate the financial strength of the rospective contractor, estimate the likeliood that financial resources will be suffiient to accomplish the contract, and report he monetary value (in local currency) of ost government capital assets furnished or nade available to the contractor which may be used in the contract.

c. Provide access to available accounting ystem disclosure statements and assistance n determining the systems's ability to meet Contractual requirements.

2. Perform government quality assurance, is defined in STANAG 4107, in whole or in art as requested.

3. Report potential or actual slippages in contract delivery schedules or any other contractor difficulties which might affect contract performance.

4. Assess contract progress if needed by the purchasing office to authorize financial payments, and recommend approval or disapproval of contractor payment requests.

5. Evaluate the feasibility and practicality of contractor production plans.

6. Verify contractor management reports furnished to the purchasing office during contract performance.

7. Evaluate and monitor contractor compliance with contract requirements governing technical data, especially the propriety of any restrictive markings on data offered for delivery under the contract.

8. Monitor contractor costs under cost reimbursement contracts, and insure the purchasing office is advised of any anticipated overruns or underruns of estimated costs.

9. Advise the purchasing office if supporting contract administration is needed at subcontractor plants to verify the adequacy of prime contractor management, and assist the purchasing government obtain desired support within the host country.

ANNEX V TO MEMORANDUM OF UNDERSTANDING BETWEEN THE GOVERNMENT OF THE KINGDOM OF THE NETHERLANDS AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA CONCERNING THE PRINCIPLES GovERNING MUTUAL COOPERATION IN THE RESEARCH AND DEVELOPMENT, PRODUCTION AND PROCUREMENT OF DEFENSE EQUIPMENT, SIGNED AT THE HAGUE On 24 August 1978

Protection of Information

The Security Procedures For Industrial Operations Between The Ministry of Defense of the Netherlands and the Department of Defense of the United States of America, developed to implement the provisions of the U.S./Netherlands General Security of Information Agreement, dated April 6, 1981, apply to the safeguarding of classified military information exchanged under this Memorandum of Understanding.

Such procedures are applicable in those cases in which contracts, subcontracts, precontract negotiations, or other government approved arrangements, involving classified military information of either or both governments, are placed or entered into by or on behalf of one government with industry in the country of the other government.

For the government of the Kingdom of The Netherlands.

Date 9th April 1982.

For the Government of the United States of America.

Date 9 April '82.