What Does ITAR Mean To a Small Government Contractor

In our last blog we discussed the export regulations for commercial items. Many government contractors also have an obligation to control export of data and goods outside the United States under the Arms Export Control Act (AECA) or the International Traffic in Arms Regulations (ITAR). These regulations are designed to protect our military technology and advantage and can be a much more serious issue. The AECA governs exports (both permanent and temporary) of both defense articles (products and data) as well as defense services. The ITAR controls export of technology as defined in the US Munitions List (USML). I’m sure many of you have seen documents that have had ITAR control stamps on them. I think it is interesting to note that ITAR controlled items could be a violation without the item ever leaving the country. This would be a case where a foreign person sees or has access to ITAR controlled information/products in the US. I had an experience one time where I was in a meeting at a large defense contractor and an engineer from Canada was escorted out of the meeting by company security as the discussion turned to ITAR controlled information.

I mentioned that this is serious business. There are criminal penalties for ITAR violations. For instance, up to $1Million in penalties and/or 10 years in prison are possible on ITAR violations. It is also possible for civil penalties up to $500,000. In addition, there is the possibility of debarment from either exporting defense articles & services or debarment from government contracting. All of these penalties can be applied to both the company and the individual. I think that is a key, the penalties can apply directly to an individual.

So what does it mean? If there is an ITAR restriction in your contract or stamped on your documentation (drawings, specifications, etc), you must treat that information as not exportable. Export here means:

• Sending or taking controlled hardware or technical data out of the United States in any manner
• Disclosing (including oral or visual disclosure) or transferring controlled hardware or technical data to a foreign person, whether in the United States or abroad
• Providing defense services to, or for the benefit of, a foreign person, whether in the US or abroad
• Transferring registration, control or ownership to a foreign person of any USML aircraft, vessel or spacecraft, whether in the US or abroad.

If, on the other hand, you are going to export anything (last time we talked about purely commercial exports) you would need to determine if the item to export is controlled by ITAR as these additional restrictions would apply. The first thing to do is check the US Munitions List to see if the item is listed here. If it is listed, then you must be registered with the Directorate of Defense Trade Controls (DDTC) and apply for an export license. The DDTC is part of the State Department and the registration request is also reviewed by the Treasury Department to make sure there are no outstanding law enforcement concerns. There is a fee for the export registration.