How To Get Ahead of ITAR Compliance
by Emma Frisch, Law Clerk
International Trade Law
If your company is a contractor or subcontractor, for the US Department of Defense, Airforce, Navy or similar branch, there is a good chance that your company needs to be ITAR compliant. ITAR, the International Traffic in Arms Regulations, controls products and services that are “defense articles” and “defense services” (see below for the full definition). These terms are defined broadly and may encompass things that, at first glance, do not appear to have a defense purpose or national security implication. Even if the product or service offered by your company is not included in the scope of the definition within ITAR, it may still be ITAR controlled if the item is listed on the United States Munitions List (USML; 22 CFR 121.1) or if the contract or subcontract expressly requires it. As a result, many companies have been surprised to find out that ITAR applies to them.
If you find that your products and services are subject to ITAR, your company will need to register with the Directorate of Defense Trade Controls (DDTC). Registered companies are obligated to proactively notify the government when certain changes are made within the company. These notification timelines are easy to miss, but failure to comply may risk a company’s eligibility to hold ITAR related contracts. Here are the key notification deadlines:
- 5 days: an ITAR registered company must notify the DDTC within 5 days of any change to the company’s name, address, legal organization structure, ownership or control, establishment, acquisition, or divestment of a US or foreign subsidiary or other affiliate, board of directors, senior officers, partners, or owners, or any indictment, charge or conviction being brought against certain individuals associated with the company.
- 60 days: an ITAR registered company must notify the DDTC at least 60 days in advance of any intended sale or transfer to a foreign person of ownership or control of the company. Additional separate governmental approval may be needed for this transfer to happen.
Lastly, ITAR registered companies will need to keep up with changes in the regulations and provide ITAR training to all its employees on an annual basis. If you’re considering bidding on a government contract that is defense related, having an ITAR compliance and training program might be a consideration for awarding the contract.
Top tips to remember:
- Understand what products and services are controlled under the definitions of the regulations.
- Check the provisions of the contract or subcontract for mentions of ITAR.
- Keep up to date with reporting requirements and changes in the regulations.
- Have ITAR compliance procedures and training programs in place.
Definition of “Defense Articles”:
Defense articles means any item or technical data stored in any physical form, models mockups or other items that reveal technical data related to a designated item and forgings, castings and other unfinished such as extrusions and machined bodies, that have reached a stage in manufacturing where they are clearly identifiable by mechanical properties, material composition, geometry, or function as defense articles. It does not include basic marketing information on function or purpose or general system descriptions.
Definition of “Defense Services”:
Defense services means the furnishing of assistance (including training) to foreign persons, whether in the United States or abroad in the design, development, engineering, manufacture, production, assembly, testing repair, maintenance, modification, operation demilitarization, destruction, processing, or use of defense articles. The furnishing to foreign persons of any controlled technical data, whether in the US or abroad, or military training of foreign units and forces, regular and irregular, including formal or informal instruction of foreign persons in the US or abroad or by correspondence courses, technical, educational, or information publications and media of all kinds, training aid, orientation, training exercise, and military advice.