Russ Farmer, one of ReliAscent's co-founders, passed along a very interesting piece of news to me this morning, written by Jim Harris of the Holland & Knight Law Firm. It seems a California-based, small business aerospace contractor was eliminated from an ARMY Contract Competition last month, simply over the "description of its own ITAR compliance program." Naturally, this piece caught my eye---as that second sentence may have just caught yours (and the attention of the thousands of government contractors that regularly read our blog).
In my years of working for ReliAscent, and at other aerospace and research companies, and through all of the contact with small business DoD and NASA contractors I have had in my career, I can tell you that the mere mention of "ITAR," elicits some very interesting reactions. Many companies, like the one in the piece below, simply assume "Hey, we are registered with the The Directorate of Defense Trade Controls (DDTC), and someone at the company is in charge of that whole thing---they keep written records demonstrating compliance---so we are in the clear."
Others take the common approach---which may sound familiar because your own company says the same thing, or you've heard it from customers: "ITARs? We don't touch that" or "No thanks. We won't buy it or sell it., or do business with foreign entities." But that won't get you far for long...
For those of you that belong to group A, you should find this piece particularly important, and you may want to reconsider how your company goes about not only maintaining ITAR compliance, but even how you simply describe your compliance program in proposal efforts:
"On August 11, 2016, the U.S. Government Accountability Office (“GAO”) denied a government contract protest by Microwave Monolithics, Inc. See, GAO case number B-413088. The case is noteworthy because of the reason for denial. GAO found that the company’s proposal was properly eliminated from the competition where the Army reasonably concluded that the proposal failed to show compliance with the International Traffic in Arms Regulations (ITAR), as required, even though the company was registered with the State Department’s Directorate of Defense Trade Controls (“DDTC”).
Microwave Monolithics, Inc., a small business in Simi Valley, California, protested the elimination of its proposal from the competition under request for proposals issued by the Department of the Army, Army Materiel Command (“Army”) for personal recovery devices. The RFP stated that a proposal had to meet the solicitation’s minimum requirements, which included the following pertaining to ITAR compliance:
The offeror, and subcontractors as appropriate, is ITAR compliant, or has a viable plan to become ITAR compliant prior to contract award. The contractor has appointed an employee to be responsible for ITAR compliance and has established the following: written policies and procedures for employees performing activities subject to ITAR and/or handling ITAR-controlled items or data; procedures for the receipt, handling, storing, implementation and testing of ITAR-controlled items, procedures for the restriction of access by foreign nationals to ITAR-controlled items or data; an auditing procedure for ITAR compliance; and procedures for actions to be taken if a violation is discovered.
The Company argued that its proposal met the requirement, in part, because it was registered with DDTC, which by default requires a designated security officer and maintenance of records showing compliance per ITAR Section 122. The Army maintained that it was looking for more detail than mere ITAR registration.
In addition to existing DDTC oversight, Government customers increasingly are taking steps to mitigate export control risks of their contractors through the contracting process itself. Any company active in government contracts should review RFP language carefully with respect to ITAR compliance. The ability of a contractor to clearly describe a viable ITAR compliance program could affect the competitiveness of its proposal."
- Thank you to Jim Harris, and Holland & Knight, for this excellent piece on ITAR compliance. For contractors looking for ITAR Compliance Consulting and Training Services, please contact Holland & Knight's Ron Oleynik, of https://www.hklaw.com/ronald-oleynik/.