Says the regulation:

Any person who engages in the United States in the business of either manufacturing or exporting defense articles or furnishing defense services is required to register with the Directorate of Defense Trade Controls. For the purpose of this subchapter, engaging in the business of manufacturing or exporting defense articles or furnishing defense services requires only one occasion of manufacturing or exporting a defense article or furnishing a defense service. Manufacturers who do not engage in exporting must nevertheless register.

Mere non-destructive testing is sufficient to trigger this requirement if the tested item is on the munitions list (USML). How is this possible? The product of the testing, the data itself, counts under the law as a manufactured item. And since 127.1(d) further bans the procurement or causing of the violation of the requirements, simply knowing that your testing supplier is not registered violates the law.

TS Trade and Alpine were both involved with AECA and ITAR violations according to this proposed charging letter. Both firms took remedial compliance steps once caught, including new executive appointments, training, and the creation of new procedures. However Alpine did not submit a voluntary disclosure when its violations became known. TS Tech did. In the end, Alpine was hit with 8 violations vs TS Tech’s one. Further, according to the final consent decrees, Alpine’s fine was larger than TS Tech’s.

The government has broad latitude in just how many violations it will pursue, and how large of a fine it will seek in a consent decree involving multiple violations. Voluntary disclosures trigger mercy. Additionally, acquiring training and seeking help to rewrite procedure manuals to catch and avoid future violations both can result in more lenient settlements.

Firms in violation of ITAR still have the power to seek help and make things better on themselves, before it’s too late.

The root of the problem is a decision to let foreign nationals have access to research which relates to satellites. Spacecraft fall under ITAR since 1998, says Nature.

Some say this is proof the law needs to be changed, but most of us don’t have the luxury of blaming the law when we break it and get caught.

In 2007, Sandhill Scientific, Inc. attempted to export $6,700 worth of goods to Dubai for re-export into Iran. The firm knew this was the intent, and willfully defied OFAC to make this export.

In order to try to make a sale not quite worth $7,000, Sandhill paid $126,000 in a settlement with the Treasury Department. Fines this steep require a very low probability of being caught, for ignoring OFAC to make any sense at all.

And with the US Government actively watching rogue states like Iran, estimating such a low probability is not a sensible choice. Instead, get educated, get trained, and follow all statutory and regulatory requirements.

This prevents importing corrupt practices from abroad. It’s never just the cost of doing business. Know the law.

The Foreign Corrupt Practices Act prohibits foreign bribery. You can go to prison for it, and your company can pay millions in fines over it.

FCPA compliance may not be a direct issue when it comes to exporting aerospace manufacturing abroad, but any organization should be mindful of it, and make sure the law is obeyed.

According to the AIA, this would increase unemployment by a full point as it destroys over a million jobs. It would also open us up to threats at home and abroad, as our defense abilities are eroded.

However nothing “automatic” is actually automatic, unless it’s in the Constitution. The President and members of Congress have the power to stop sequestration of defense spending. AIA urges you to ask for sequestration to be stopped.

However the US Navy plays by its own set of rules.

MV Eglantine, a bulk carrier vessel, was captured by Somali pirates in March. The US Navy will attempt “aid and rescue” of the ship, which was noted by the press because the ship is believed to be owned by Iranians.

There’s more to it than that, though. The ship has carried other flags, including that of Cyprus, but regardless of its flag, the ship is listed by name on the OFAC blocked list:

EGLANTINE (f.k.a. BLUEBELL; f.k.a. IRAN GILAN) Bulk Carrier 63,400DWT 39,424GRT Cyprus flag (IRISL); Vessel Registration Identification IMO 9193202 (Cyprus) (vessel) [NPWMD]

The rest of us have to respect the sanctions, though. The list applies regardless of the countries involved. If a person or other entity is excluded, the sanctions apply. Unless you’re a Naval vessel fighting pirates at sea, know the law. Check the list. Avoid serious problems later.

And yet, some look for any reason to get around the ITAR requirements. That’s a mistake for any organization claim AS9100 compliance.

AS9100 was written with regulation in mind. The AS9100C revision uses the word ‘regulatory’ 17 times. The authors leave no doubt at all that government regulations must be followed, and that they take precedence over AS9100 requirements whenever they may conflict.

Not only is it a requirement of AS9100 that an organization comply with regulations, but it is specifically a management responsibility under 5.1a to meet statutory and regulatory requirements in addition to the customer’s requirements.

It’s not just management that has to give clear communication of that requirement, either. Per 4.1, the entire quality management system must take into account regulatory requirement. No matter where we look in the AS9100 standard, it is not possible to be AS9100 complaint without also meeting all applicable ITAR requirements as well.

As a result, individuals, not just their employers, are at risk of civil and criminal penalties under AECA and ITAR.

Matt Kallgren learned this first hand. He was a sales manager for Powerline Components Industries, LLC (PC Industries) in late 2006. He arranged the sale of diesel engine parts to a company in Syria, which was under sanctions by the US Government. PC Industries’ usual freight forwarder even told Kallgren that fact, and explained that forwarding the parts to Syria would be illegal.

At that point, once Kallgren knew he was attempting to break the law, Section 127.1 applied to him. When he then chose to seek out another freight forwarder that would help him ship the parts to Syria, he personally violated the regulations. Which is why, in the end, he suffered criminal prosecution by the US Attorney for conspiracy to violate export laws.

Because he insisted on making a sale for his company, rather than making sure to fulfill his obligations under regulation, statute, and treaty, Kallgren was sentenced to four months home confinement, three years probation, a $100 assessment, and a $1,000 fine.

Even worse for Kallgren, ITAR was not the only regulation he violated. The Commerce Department’s Export Administration Regulations (EAR) also applied, and he faced civil enforcement of those regulations, which resulted in him being barred from the industry for a period of years, when he entered into a plea agreement with the government.

Ignoring export controls hurts more than just your employer. You as an individual will be held accountable if you try to cut corners and work around them. Switching to a more flexible freight forwarder, modifying documents to hide export control issues, and even simply giving instructions to unwitting third parties to evade any regulatory or statutory requirement, all of these can results in criminal liability for you, personally.

According to the executive order, the goal of the Export Coordination Enforcement Center it created is to “enhance our enforcement efforts and minimize enforcement conflicts.” The center is meant to coordinate the efforts of eight named departments and offices, plus any others to be named later. The State, Treasury, Defense, Justice, Commerce, Energy, and Homeland Security departments are named as having roles in export controls, as is the Office of the Director of National Intelligence. Seven cabinet-level agencies plus an eight office does in fact create 28 lines of communication. That is undeniable and a cause for concern.

This concept, as executed, has several problems. First, instead of easing the workload on the named departments, it increases the workload while reducing staff. In addition to fulfilling their existing roles under the law, now they must also do as the center and the order demand, giving up staff and funding to the center, all without compensation. The departments must do more with less.

Second, and more fundamentally, the order is conceptually backward. If we have uncoordinated, overlapping, and even conflicting export controls, thanks to having a proliferation of departments responsible for those controls, the solution is not to create yet another office with responsibility for the topic. As Randall Munroe explained, proliferation is not solved by more proliferation. By adding the center to the mix, we’ve gone from 28 lines of communication to 36. The problem has worsened.

But the third and biggest reason the President’s executive order is the wrong approach is that it attempts to go it alone. If the President is right, and there is a problem of departments with overlapping and conflicting statutory authority, the obvious solution is to fix the statute. Why not simply go to Capitol Hill and ask the Congress to pass a bill that consolidates agencies and funds the process?

By passing a new law we would fix the problem for good, make sure export controls are fully funded, and create a leaner, more efficient government. With fewer offices, instead of more, there would be fewer lines of communication, and therefore fewer opportunities for miscommunication or even failure to communicate.

The President should rescind this executive order, and work with the House of Representatives and the Senate to pass a proper solution: consolidating the too-numerous export control efforts in Washington.