Unpacking ITAR Compliance

The International Traffic in Arms Regulations (ITAR)  are complicated but taking a few simple steps will help a company comply with ITAR requirements when selling munitions or ITAR controlled technical data to a department of defense or other government agency.

If you are the manager of a company and you are tasked with ensuring ITAR compliance, you should:

A. Incorporate compliance into employee performance plans, “Human Resource Manuals”  and employee evaluations to help generate support and buy-in among employees;

B. Recognize and reward employees who speak up, even if the problem reported resulted in no specific confirmed violation, but may lead to improving the organization’s compliance procedures;

C. Communicate to employees that export control violations will not be tolerated and may result in disciplinary action against the employee, regardless of the employee’s position, title, or performance; and

D. Adopt clear disciplinary procedures and consequences for compliance misconduct.

After an ITAR compliance plan (ICP) is created and adopted by your company, then:

A.   Ensure that your company is providing sufficient resources (budget advocacy), including time, funding, personnel, and training, to implement and maintain an ICP commensurate with the organization’s risk; and

B.   Create and maintain an “Export Compliance Management Commitment Statement” consistent with your ICP.

You must demonstrate your company’s commitment to ITAR compliance by:

A. In writing (to provide a paper trail in the event of government audit) clearly state the organizations policies and procedures for ITAR compliance;

        a.  This writing must be specifically tailored to an organization’s ITAR-controlled activities and its areas of risk;

        b.   It must be regularly (at least semi-annually) reviewed and updated by various business departments in your company responsible for complying with the ITAR; and

        c.   The directives in the writing must be fully supported by management at all levels. This requires distribution of the writing to management and training in company ITAR requirements.

B. Management should provide compliance personnel with adequate resources, including the appropriate training, funding, human capital, organizational support, information technology resources, and other resources to fulfill their responsibilities and implement an effective ICP; and

C.  Management should take account of the organization’s size, scope of operations, and overall risk profile to assess the adequacy of the resources.

Those employees tasked with day-to-day implementation of ITAR policies and the dissemination of ITAR requirements to others in your company:

A. Should understand and advocate to others in your company that ITAR compliance is everyone’s responsibility within the organization;

B.   Should be expected to think about and recommend ways to improve compliance and raise concerns when they see a possible problem; and

C.   Performance plans and evaluations should reflect and account for those expectations.

The executive (C suite personnel) has responsibilities regarding ITAR compliance as noted in ITAR § 120.67, including:

• 1. Ensuring that a company employee has authority for policy implementation and management;
  2. That C-suite personnel have written legal empowerment to sign license applications and other requests for approval on behalf of the organization;
  3. Understanding statutes, regulations and company liability in the event of an ITAR violation;
  4. Possesses independent authority to:
     1. Inquire into any aspect of organizations trade-related activity;
     2. Verify legality of trade transactions and accuracy of the info submitted to licensing authorities; and
     3. Refuse to sign license app/request for approval without prejudice or repercussions from anyone at your company.

The ITAR is complicated but common-sense compliance with ITAR requirements as mentioned in this blog may save your company from an expensive and time-consuming government audit. Contact one of our ITAR expert attorneys at Centre with any questions you may have.

Want to learn more about ITAR Compliance? We have an upcoming training class in December that will get you up to speed. Check out ITAR Compliance: A Primer & Beyond.