That is an excellent question. Thanks for asking it. !!!I am not a lawyer!!!

The contract reads:

"The Federal Republic of Germany, represented by the Federal Ministry of Defense, the latter represented by The Bundeswehr University, Munich 85577 Neubiberg" (yada-yada-yada)

The contract is between a U.S. corporation and the federal government. It has to be legal, because the German Army uses some American Weaponry (e.g. the M82 sniper rifle).

And as stated in the FAQ: This has been done before - numerous times.