ITAR Part 123 Licenses for Permanent Export (DSP-5 Guide)

What Is an ITAR Part 123 License?

An ITAR Part 123 license is the State Department authorization a U.S. company needs before it sends a defense article out of the United States, unless an exemption applies. Part 123 of the International Traffic in Arms Regulations (22 CFR Part 123) sets the rules for licenses to export and temporarily import defense articles on the U.S. Munitions List (USML). For a permanent export, where the hardware is leaving and will not come back, the form is the DSP-5, filed with the Directorate of Defense Trade Controls (DDTC).

I see the same pattern again and again with manufacturers who are new to this. They treat the DSP-5 as paperwork to be assembled once the purchase order is signed. In my view that has it backwards. The license is part of the deal structure, and the things DDTC wants to see (who the end user is, where the item goes next, what the foreign party certifies) are things you should be pinning down with your customer before you quote a delivery date.

This guide walks through how Part 123 works for permanent exports, what goes into a DSP-5, when Congress gets involved, and where applicants most often get tripped up. For the broader licensing picture, see our export licensing overview.

What Does Part 123 Actually Cover?

Part 123 is more than the DSP-5. It is a collection of rules about how defense articles physically and legally move across the border. The sections practitioners reach for most often are these:

• 123.1 sets the basic requirement: a person who intends to export or temporarily import a defense article needs DDTC approval first, unless an exemption applies. It also lists the supporting documents that go with an application.
• 123.5 covers temporary export licenses (DSP-73).
• 123.9 covers the country of ultimate destination and the approval needed for reexports and retransfers.
• 123.10 requires the Nontransfer and Use Certificate (DSP-83) for significant military equipment and classified articles.
• 123.15 covers Congressional notification for larger transactions under section 36(c) of the Arms Export Control Act.
• 123.16 and later sections contain exemptions of general applicability and related provisions.
• 123.21 covers license validity, and 123.22 covers filing export information and handling the license at the border.
• 123.25 covers amendments to licenses, and 123.26 covers recordkeeping for exemptions.

The word "export" carries the definition in 22 CFR 120.50, which reaches beyond shipping boxes. Sending a defense article out of the country in any manner, including hand-carrying a part on a laptop-sized prototype or uploading controlled technical data to a server abroad, can count. Technical data has its own provisions in Part 125, but the DSP-5 is the form used for permanent export of unclassified technical data too, which surprises people who assume Part 123 is only for hardware.

Permanent Export vs. Other Authorization Types

Choosing the wrong form is one of the easier mistakes to make and one of the more annoying to fix, since DDTC will return or reject the application. Here is how the main license forms line up.

The test I use with clients is a simple question: will this exact item come back to the United States? If the honest answer is yes, you are probably in DSP-73 territory, and 22 CFR 123.5 applies. If the answer is no, or you are not sure and the customer will own it, you are looking at a DSP-5. Repair-and-return arrangements where the foreign customer keeps the item after a warranty swap are a classic gray area, so I would work those out before filing rather than after.

Who Can Apply for a DSP-5?

Not every company can file one. Before DDTC will look at a Part 123 application, the applicant generally needs to be a U.S. person who is registered with DDTC under Part 122 and who is eligible under the Part 120 eligibility provisions. Registration is a precondition, not something you can sort out after the application is in the queue. If you have not done this yet, start with our guide to ITAR registration.

A few eligibility points trip people up:

• The applicant must be the party that actually has authority over the export, usually the manufacturer or the exporter of record. A freight forwarder cannot stand in for the exporter on the license application.
• Applications must include the certification required by 22 CFR 126.13, which covers things like indictments, convictions, and debarments involving the applicant and its senior officers.
• Persons who are debarred or otherwise ineligible cannot take part in the transaction as a foreign or domestic party without DDTC authorization.

How Do You Apply for a Permanent Export License?

DSP-5 applications are filed electronically through DDTC's Defense Export Control and Compliance System (DECCS). The work that matters happens before you get to the submit button.

Step 1: Confirm jurisdiction and classification

You need to know the item is a defense article on the USML and which category and paragraph it falls under. If it might instead be a Commerce-controlled item, that is a different regime with different forms, and the ITAR vs. EAR comparison is a useful place to sort that out. If you are truly unsure, a commodity jurisdiction request is the formal route. Guessing, and filing a DSP-5 for something that was never ITAR-controlled, wastes time, and the reverse mistake (shipping something ITAR-controlled under a Commerce license or no license) is a violation.

Step 2: Identify every party and the end use

DDTC wants to know the U.S. applicant, the foreign consignee, the foreign end user, and any intermediaries. The end-use description should say what the item will actually do for whom. A vague end-use statement such as "for military use" is a common reason applications come back with requests for more information.

Step 3: Assemble the supporting documents

22 CFR 123.1(c) lists what must accompany the application. In practice, you should expect to have:

• A purchase order, contract, letter of intent, or similar document showing the transaction is real
• A description of the article, with quantity and value
• The DSP-83 Nontransfer and Use Certificate if the item is significant military equipment (marked with an asterisk on the USML) or classified, as required by 22 CFR 123.10
• The 126.13 certification
• Any additional documents DDTC asks for given the destination or item

The DSP-83 deserves its own note. It is signed by the foreign consignee, the foreign end user, and, depending on the circumstances, the foreign government, and it commits them not to reexport or retransfer the item without U.S. Government approval. If your customer's legal department drags its feet on signing, the license drags with it, so I recommend sending the form early.

Step 4: Check for Part 126.1 and other red flags

If the destination is a country listed in 22 CFR 126.1, the policy is generally denial, and applications are reviewed under a very different standard. Even for friendly countries, DDTC looks hard at diversion risk, so you should also screen all parties against the consolidated screening lists and document the screening.

Step 5: Submit, respond, and wait

Once you submit through DECCS, the application is reviewed, and DDTC may return it, approve it, approve it with provisos, or deny it. Provisos are conditions attached to the license, and they are binding. A proviso that restricts end use or requires a particular route is just as enforceable as the regulation itself, so read every one before you ship.

Processing times vary with the item, the destination, and the interagency review required, so I would avoid promising a customer a date. Build a buffer into the contract instead.

When Does Congress Get Involved?

Section 36(c) of the Arms Export Control Act, implemented in 22 CFR 123.15, requires DDTC to notify Congress before it issues certain licenses. The thresholds written into the regulation are:

The waiting period is 30 calendar days for most countries and 15 calendar days for that second group. These figures come from the text of the AECA and 22 CFR 123.15, so verify the current numbers before you rely on them in a deal model, since Congress can change statutory thresholds.

The practical consequence is that a large permanent export cannot be approved on DDTC's schedule alone. If your transaction is near a threshold, tell your sales team early. I have seen a deal slip a full quarter because nobody connected a large contract value to a notification requirement.

How Long Is a Part 123 License Valid?

Under 22 CFR 123.21, a DDTC export license is valid for four years from the date of issue, subject to the conditions on the license. Once the quantity or value on the license is used up, the license is spent even if the four years have not run. And an expired license cannot be extended. If you still have unshipped items, you apply again.

If the facts change during the life of the license (a different consignee, an added quantity, a change in value), 22 CFR 123.25 provides a process for amending the license. Do not assume you can ship to a new party because the old one is "basically the same company." The license names specific parties for a reason.

What Happens at the Border?

A license in your files does not move a shipment. Before export, the exporter must file Electronic Export Information through the Automated Export System, and 22 CFR 123.22 describes how the license is used and decremented at the point of export. Customs and Border Protection can detain shipments where the paperwork does not match the license, which is why the description, value, consignee, and quantity on the commercial documents need to line up with what DDTC approved.

Once the shipment is out the door, recordkeeping is your job. The ITAR record-retention requirement in 22 CFR 122.5 is five years from the expiration of the license or other approval, and that includes the license, supporting documents, shipping records, and correspondence. For a practical breakdown of what to keep, see our post on ITAR record-keeping requirements.

Do You Always Need a License? Exemptions Under Part 123 and Elsewhere

There are exemptions that let you export certain defense articles without a DSP-5, but they are narrower than most people hope. Part 123 includes exemptions of general applicability in 123.16 and following, and other exemptions sit in Parts 125 and 126, including the Canadian exemption in 22 CFR 126.5 and the AUKUS-related exemption in 22 CFR 126.7. Each one has conditions on item, destination, end use, and paperwork.

Three habits keep exemption use defensible:

1. Read the whole exemption, including its limits, before relying on it. An exemption that covers the item may exclude the destination or the end use.
2. Document your reasoning at the time of the export. Section 123.26 requires recordkeeping for exemptions, and an exemption you cannot back up with records is, in practice, a violation waiting for an audit.
3. Check whether the item is significant military equipment or otherwise carved out. Many exemptions do not apply to SME.

If you discover that an export went out under an exemption that did not actually apply, that is the kind of problem a voluntary disclosure exists for, and the earlier it is raised the better.

Common Mistakes That Delay or Sink a DSP-5

These are the problems I run into most often, roughly in the order they happen in a deal:

• Starting the license after the contract is signed. If the contract commits you to a delivery date without a license-contingency clause, you have taken on the licensing risk yourself.
• Thin end-use descriptions. DDTC reviewers cannot approve what they cannot understand. A clear description of what the item is, who uses it, and for what purpose saves a round of questions.
• Missing or late DSP-83s. The foreign party's signature is on a timeline you do not control.
• Ignoring provisos. Provisos can require things like prior notification, marking, or a restriction on reexport, and violating one is a violation of the license.
• Forgetting that technical data is also an export. Emailing a drawing set to a foreign engineer under a hardware license does not work unless the license covers the data.
• Mismatched shipping documents. The commercial invoice, the AES filing, and the license should all describe the same thing.

The cost of getting this wrong is serious. Under 22 U.S.C. 2778(c), willful violations of the AECA carry criminal penalties of up to $1 million and 20 years of imprisonment per violation, and civil penalties under 22 CFR 127.10 are adjusted for inflation each year. Our overview of ITAR violations and penalties goes through what enforcement has looked like in practice.

Does a Part 123 License Cover Everything?

No, and this is where I would encourage you to slow down. A DSP-5 authorizes the export of the defense article or technical data described in it. It does not authorize the following:

• Defense services. If you will be training the foreign customer, helping them install the item, or assisting with integration, that typically needs a technical assistance agreement under Part 124.
• Manufacturing abroad. Sharing know-how so that the customer can build the item overseas calls for a manufacturing license agreement, also under Part 124.
• Later transfers. Section 123.9 and the DSP-83 make clear that reexports and retransfers require U.S. Government approval. Your customer cannot sell it onward on a handshake.

What I ask clients to do is map the whole relationship, not just the first shipment. If the customer will need spare parts, training, and software updates over the next five years, the right question is what authorizations that whole arrangement requires, and whether you would rather get them together.

A Practical Checklist Before You File

• Is the item on the USML, and have you identified the category and paragraph?
• Is your company registered with DDTC and eligible to apply?
• Do you have a purchase order or contract and a clear end-use statement?
• Is the DSP-83 required, and has the foreign party signed?
• Is the destination in 22 CFR 126.1, and have all parties been screened?
• Is the value near a Congressional notification threshold in 22 CFR 123.15?
• Will you also need a Part 124 agreement or a technical data authorization?
• Do your shipping documents match what you are asking DDTC to approve?

If you want a broader internal framework around this, our ITAR compliance checklist puts licensing in the context of the rest of a compliance program.

Where I Would Start If You Are New to This

If you are a small manufacturer with a first foreign order in hand, I would resist the urge to just fill out the form and see what happens. Spend a few hours on classification and on the contract language first. A license application is only as good as the facts behind it, and DDTC reads those facts closely.

The larger question is whether your company has a repeatable way to do this, or whether each export is a one-off scramble. A repeatable process is what keeps the third and fourth export from being as stressful as the first. If you would like help building one, or reviewing a pending DSP-5, you can reach us through the contact page.

Frequently Asked Questions

What is the difference between a DSP-5 and a DSP-73?

A DSP-5 authorizes permanent export of unclassified defense articles and technical data, meaning the item is not coming back. A DSP-73 authorizes temporary export, such as for a trade show or testing, where the item is expected to return to the United States. The governing section for temporary exports is 22 CFR 123.5.

How long is an ITAR export license valid?

Under 22 CFR 123.21, a DDTC export license is valid for four years from issuance, subject to its conditions. It ends earlier if the approved quantity or value is fully used. An expired license cannot be extended, so a new application is needed for any remaining shipments.

When does an ITAR license require Congressional notification?

Under section 36(c) of the Arms Export Control Act and 22 CFR 123.15, notification is required at $14 million or more for major defense equipment or $50 million or more for other defense articles. For NATO members, Japan, Australia, South Korea, Israel, and New Zealand the thresholds are $25 million and $100 million. The review period is 30 days, or 15 days for that second group.

Do I need a DSP-83 for every DSP-5?

No. Under 22 CFR 123.10, the Nontransfer and Use Certificate is required for significant military equipment and classified articles. Other exports may not need one, though DDTC can still request additional documentation depending on the item and destination.

Can a freight forwarder apply for the license on my behalf?

The license applicant needs to be a registered U.S. person with authority over the export, generally the manufacturer or exporter. A forwarder can handle logistics and file Electronic Export Information as your agent, but responsibility for the authorization stays with you.

Last updated: 2026-10-19

Jared Clark, JD, MBA, PMP, CMQ-OE, CQA, CPGP, RAC, is Principal Consultant at Certify Consulting (https://certify.consulting). This article is general information about the ITAR and is not legal advice for a specific transaction.