ITAR: Don’t Get Your Hand Slapped (Or I-TAR You-Pay)
ITAR: the acronym nearly all aerospace professionals know and fear. For those of you who are (blissfully) unaware, ITAR stands for the International Traffic in Arms Regulations. “But why do aerospace professionals fear ITAR? Shouldn’t we be happy the government is taking an active role in moderating the flow of weapons illegally?” Of course the answer is yes: regulation of the arms trade is necessary and even desirable. However, ITAR is especially important in aerospace, because the genesis of our industry lies within military development. For decades governments (specifically the U.S. government) have invested in military aerospace technologies, which have formed the technological basis of the multi-national commercial aerospace enterprises of today. This is where our story begins.
The Ever Expanding Grip of ITAR
ITAR has a habit of contaminating commercial (and even military) aerospace programs. This is because any ITAR controlled part, document, or technical information is subject to very strict access restrictions (the legal beagles can check out all the gory details here). For a majority of us working on commercial programs there is a great big “So what? I don’t work on a military project, and I work with a multi-national team developing solutions. There’s no risk here.” Let’s look at a short hypothetical situation: your company has developed a part for the military which is classified as ITAR restricted. Based on your stellar technical performance and world-class customer service you manage to win a lucrative commercial program, the core of which leverages your existing commercial technologies. Excellent! We’re all employed and working hard.
As the program progresses you realize you need test hardware for early risk reduction and your commercial part isn’t QUITE ready yet. Well that’s ok, because it’s basically the same part as that military part we built a few years ago, can’t we just use one of those parts instead? Sure, the test venue is in the U.S., and the hardware is available now, no export violations here; let’s get testing! This is where we pause: that ITAR part, which is now part of your test configuration, has contaminated your entire test program; this is because, not only is the part ITAR controlled, but all data associated with that ITAR part are now controlled. This means all test data, which includes functions associated with this ITAR part, are now controlled. Now you will need to restrict access to your test results. Now your multi-national team members are unable to access the test data they desperately need to analyse. This means your multi-national customer may not be able to review the data, and you certainly can’t present the data without labeling them as ITAR (which raises all sorts of alarm bells for commercial companies). Just imagine walking into that swanky wedding in your custom Armani suit, or Versace dress, sporting sweaty old flip-flops, and you can see what your ITAR part has just done.
“Ok, fair enough. I’ll pay attention to ITAR rules and do my best to make sure we’re compliant, but seriously, what’s the worst that could happen?”
How Not to Succeed
The U.S. State Department takes ITAR violations extremely seriously, and has no qualms about investigating and/or fining companies. In 2007, ITT Corp was fined $100 million for violations relating to exporting ITAR controlled night vision technology. And more recently, in June 2012 United Technologies and its subsidiaries were fined more than $75 million for ITAR violations.
We must all be mindful of the impacts of our plans and decisions related to controlled products, especially in an industry with such close ties to military development. ITAR is serious business.
U.S. Department of State: The International Traffic in Arms Regulations (ITAR)
Military Aerospace: ITAR violations have produced high profile defense export penalties
Association of Corporate Counsel Lexology: Lessons learned: the United Technologies Corporation case
Disclaimer: Any views or opinions presented in this blog post are solely those of the author and do not necessarily represent those of Aversan Inc.