Which statement correctly defines Major Defense Equipment (MDE) under 22 CFR 120.8?

Which statement correctly defines Major Defense Equipment (MDE) under 22 CFR 120.8?

• A. It requires that the item be SME, have nonrecurring R&D costs of at least 50 million dollars, and a total production cost of at least 200 million dollars.
• B. It requires the item to be produced domestically only.
• C. It requires only the presence of a high unit cost without R&D requirements.
• D. It is limited to items with a production cost under 50 million dollars.

Answer: (A)

Major Defense Equipment is defined by a combination of designation and investment thresholds that signal a high level of development and production effort. An item is considered MDE when it is classified as Significant Military Equipment (SME) and it meets two financial thresholds: nonrecurring R&D costs of at least $50 million and a total production cost of at least $200 million. This pairing ensures the most sensitive, expensive, and technologically advanced items stay under the strict export controls of ITAR. These criteria aren’t about where something is produced, and they aren’t based solely on high unit cost. An item could be expensive per unit but not meet the R&D and total production cost thresholds, so it wouldn’t be MDE. Conversely, an item that might have substantial development and production costs but isn’t designated as SME wouldn’t meet the MDE trigger either.

Major Defense Equipment is defined by a combination of designation and investment thresholds that signal a high level of development and production effort. An item is considered MDE when it is classified as Significant Military Equipment (SME) and it meets two financial thresholds: nonrecurring R&D costs of at least $50 million and a total production cost of at least $200 million. This pairing ensures the most sensitive, expensive, and technologically advanced items stay under the strict export controls of ITAR.

These criteria aren’t about where something is produced, and they aren’t based solely on high unit cost. An item could be expensive per unit but not meet the R&D and total production cost thresholds, so it wouldn’t be MDE. Conversely, an item that might have substantial development and production costs but isn’t designated as SME wouldn’t meet the MDE trigger either.