One June 15, 2026, the U.S. Department of State’s Directorate of Defense Trade Controls (“DDTC”) issued a proposed rule that would substantially streamline and simplify the reporting requirements under Part 130 of the International Traffic in Arms Regulations (“ITAR”), which governs the disclosure of political contributions, fees, and commissions paid in relation with certain defense sales. Although a component of the ITAR, Part 130 does not impose specific export restrictions or controls. Instead, it is a reporting mechanism for the U.S. Government to collect information regarding payments in connection with defense exports to help it identify potential violations of the Foreign Corrupt Practices Act (“FCPA”) and other anti-corruption prohibitions.  The proposal, based on recommendations from the Defense Trade Advisory Group, represents a significant modernization of Part 130. By replacing the requirement for transaction-specific disclosures with an annual reporting system, creating a standardized electronic reporting form, clarifying reporting obligations in the context of mergers and acquisitions, and increasing long-standing monetary thresholds, the proposed rule seeks to reduce administrative burdens on U.S. defense exporters and improve the consistency and accuracy of reporting.

Public comments on the proposed rule are due by August 14, 2026. In addition to general comments, DDTC has specifically requested input on a number of issues, including: (1) feedback on any operational, administrative, or compliance challenges associated with annual reporting; (2) comments on the draft standardized form; (3) comments on the utilization of the form considering different reporting scenarios; (4) whether annual reporting and the standardized form would produce a more precise and accurate accounting of reportable payments; and (5) whether the proposed changes would alleviate existing difficulties with Part 130 reporting, or, if not, why those difficulties would remain.

Five key updates emerge from the proposed rule:

  • DDTC Would Replace Transaction-Based Reporting with Annual Reporting. Currently, applicants must report to DDTC on political contributions, fees, and commissions paid in connection with any sale for which an export license or approval is required as part of each license application. The proposed rule would replace this framework with a single annual reporting requirement. Registrants would submit annual reports at the time of their DDTC registration renewal on all covered contributions, fees, and commissions paid or offered to be paid in the prior year, while non-registrants (e.g., suppliers to defense exporters) would be required to file by September 30 of each year. As a result, applicants would no longer need to include Part 130 reports with individual export authorization requests. This is a significant and welcome addition given challenges and potential confusion arising from the current Part 130 reporting method.  If a registrant ceases operations or allows its registration to expire, it would be required to submit a final report within 30 days of the cessation of operations or expiration of its registration.
  • DDTC Would Introduce a New Standardized Electronic Reporting Form. The proposed rule would create a new Part 130 reporting form to be submitted electronically through DDTC’s website. The new form is intended to standardize submissions and facilitate a more efficient review process by reducing errors and eliminating inconsistent formatting and information.
  • Companies Would Face New Supplemental and Interim Reporting Obligations. The proposed rule would establish two new reporting mechanisms designed to address newly discovered information: A supplementary report would be required when information discovered after the submission of an annual report requires an amendment, correction, or supplementation of that report. For example, a company that later discovers that a report omitted a previously made payment would be required to submit a supplementary report. An interim report would be required when newly discovered information reveals that an applicant or supplier should have submitted an annual report for a previous reporting period but failed to do so. Both supplementary and interim reports would be required within 30 days of discovering the relevant information. Defense exporters will need to update their internal compliance procedures to account for these new requirements.
  • The Proposal Establishes New Reporting Obligations in Mergers and Acquisitions. The proposed rule includes detailed guidance regarding responsibility for Part 130 reporting following mergers, acquisitions, and corporate restructurings. Under the proposed rule, the surviving parent, acquiring entity, or other entity retaining the DDTC registration number would assume responsibility for reporting any Part 130 information that had not yet been reported by the absorbed or acquired entity. An initial report covering the acquired entity’s historical activities would generally be required within six months of the transaction, after which future reporting would occur through the annual renewal process. The proposed rule also addresses situations involving multiple transactions occurring within the same six-month period. In such circumstances, the original acquiring entity would remain responsible for reporting information associated with the original transaction, while subsequent purchasers would be responsible for any additional historical information that had not yet been disclosed.
  • DDTC Would Increase Several Monetary Thresholds, Reducing Reporting Burdens. The proposed rule would raise several existing thresholds under Part 130. Most notably, the value threshold for covered defense articles and defense services would increase from $500,000 to $1 million. The proposed rule would also increase the aggregate thresholds for payments that must be reported: the aggregate total of political contributions to be reported would increase from $5,000 to $10,000, and the aggregate total of fees and commissions that must be reported would increase from $100,000 to $200,000.

For companies engaged in defense exports, the proposed rule offers the prospect of a more streamlined and predictable compliance process, although updates to internal compliance policies and procedures will be required to ensure compliance with the new streamlined requirements. At the same time, DDTC’s targeted requests for comment present an important opportunity for stakeholders to provide input on how the new framework would function in practice. Companies that have encountered difficulties navigating existing Part 130 requirements may wish to consider submitting comments before the August 14, 2026 deadline.

Fluet’s International Trade team is closely monitoring the proposal and regularly advises clients on Part 130 reporting requirements, export licensing, DDTC registration requirements, and corporate transactions involving defense exporters.