There is an area of regulation that is of vital importance to government contracting firms – the International Traffic In Arms Regulations (ITAR) - are State Dept. controls that regulate the U.S. defense industry. Companies regulated under ITAR are subject to a number of broad requirements including registration requirements, restrictions on transfer of regulated software and technical data, restrictions on the performance of defense services for foreign parties, the requirement to obtain export licenses and recordkeeping requirements. Since violations can result in criminal liability for the company, including imprisonment for the company’s owners and employees, it is imperative for government contracting firms to have a clear understanding of this important area of the law.
ITAR was developed originally to regulate military products and services. However, these controls also cover many products that are commercial in nature. Many of these items were developed originally for military purposes but have evolved into mainstream commercial products – in the electronics, navigation, computer security, maritime, aviation and other industries. Today it is often very difficult to determine if a product is subject to ITAR, and this presents a challenge for business executives. However it is important to understand this distinction, especially for firms that provide products and services to government customers, to avoid costly legal violations. At the core of the ITAR is a list of products called the U.S. Munitions List (“USML”). The USML contains a wide array of products as well as software, technical data and services. If a company’s product, software, technical data or services are identified on the list, the company is subject to the ITAR requirements. The USML contains 21 broad categories of products, ranging from firearms and military vehicles to computers and communication equipment.
If a company’s products, software, technical data or services are on the USML, ITAR imposes a number of requirements, and the company may become subject to one or more of the following:
Registration - the company must register with the U.S. State Department, even if it does not export any of its products;
Transfer of Technical Data And Software to Foreign Nationals – the company is prohibited from transferring software or technical data on the USML to foreign nationals, either in the US or abroad, without an export license;
Defense Services – the company is prohibited from performing services for foreign parties related to items on the USML, either in the US or abroad, without obtaining a State Department authorization called a Technical Assistance Agreement (“TAA”);
Export License – the company is prohibited from exporting products listed on the USML without obtaining an export license;
Temporary Imports – The company is prohibited from importing defense items listed on the U.S. Munitions List in temporary import transactions without obtaining a temporary import license;
Recordkeeping Requirement – the company is required to maintain records in accordance with the ITAR recordkeeping requirements;
Brokering – the company is prohibited from brokering the sale of defense items without complying with the DDTC brokering requirements;
Third Party Transfers - the company is prohibited from having goods and IP transferred from one country to another without DDTC approvals.
Selling products and services to government customers, especially in the defense industry, has become a global business. In order to remain competitive in this arena, a company must understand the rules that govern this business sector – it must incorporate the ITAR procedures into its business model.
Avonis is registered and authorized by the U.S. Department of State to help SMB's with brokering and exporting through the registration, forms completion and submission through State Dept. portals (e.g. DSP5, DSP83 etc.), licensing, administration, and implementation of business process for complete ITAR compliance. We can also coordinate with our global freight forwarding partners for shipments anywhere in the world, too.